Breaking News

CFTC Opens Way to Bitcoin Futures; More Bitcoin; Brexit May Leave Banks on the Hook for Impossible Contracts

First Read

Putting on My Broker Hat About Bitcoin
By John J. Lothian, JLN

Everyone is asking about bitcoin. A journalist called and asked to interview me. A magazine called and asked me to write something. A brokerage firm chief risk manager called to ask me my opinion about bitcoin and bitcoin futures. Two weeks ago, a former employer I have not seen in 10 years called me out in Coindesk.com for my bitcoin qualms. At the dinner table my son Robby opened up about owning not just bitcoin, but bitcoin cash, ether and monero. This is a full-fledged mania.

As I was driving home last night and thinking about bitcoin (as opposed to walking and thinking about it or sitting at my desk and doing the same), I asked myself what would John Lothian the broker think of bitcoin.

John Lothian the broker loved new products. He would often be the broker who first traded a new product at his firm or even clearing firm. He loved innovation and new markets and new customers coming to manage risk, or assume it.

However, John Lothian the broker was also John Lothian the risk manager. He was John Lothian, the customer default fund. By that I mean that when customers failed to meet margin calls or left uncollected debits, the funds would come from my commissions.

For the rest of the commentary, go HERE

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Hits & Takes

Intercontinental Exchange Chairman & CEO Jeffrey Sprecher will speak at the Goldman Sachs US Financial Services Conference on December 5 at 2:20 p.m. EST. The presentation will be available live and in replay via webcast and can be accessed in the investor relations and media section of ICE’s website. The announcement can be found here.~SR

According to DataTrek, the new(ish) venture from Nick Colas, “In the US, Google searches for bitcoin are 6-7x greater than those for ‘Kim Kardashian.'” ~SD

The SEC has doled out some $176 million to whistleblowers since it started the program in 2012.~SD

FinTank is putting on CryptoCon 2018 in Chicago on February 15 at Northwestern. You can register here. The list of speakers and panelists is coming soon.~SD

One of the main costs associated with cryptocurrency mining is the electricity needed to do it. How to solve that problem? Build a crypto-mining rig in your Tesla automobile and take advantage of free electricity at Tesla charging stations. ~JB

“What’s the deal with volatility cones?” That’s (obviously) not a Seinfeld quote, but if you’ve ever thought it, check out this blog from Bantix – Understanding Volatility Cones.~SD

Yesterday’s JLN Options: VIX-Yield Curve – At the Door of High Volatility?; Limits of Pound Gains; Sector correlations.~JJL

Sixty-one stories in yesterday’s Asia Pacific Financial News from John Lothian News, November 30, 3017 edition.~JJL

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Key points from CFTC’s Quintenz at ISDA’s London event
Spencer Doar – JLN

CFTC Commissioner Brian Quintenz addressed ISDA’s Unlocking Value in Derivatives Markets conference in London yesterday and a few timely remarks were included (as well as some shout-outs to Galileo and Prometheus…).

Regarding the crypto elephant in the room

Of all the aspects of the Commodity Exchange Act (CEA), Quintenz brought up the provision that exchanges “may not list a contract that is readily susceptible to manipulation.”

Ink has already been spilled on how thin some of the closing cash auctions can be on the crypto exchanges which these prospective bitcoin futures contracts will use in determining the underlying’s price. With the above comment from Quintenz, it is clear this pricing mechanism is of some concern, regardless of today’s announcement from the CFTC.

Read the rest HERE.

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I’m a Depression historian. The GOP tax bill is straight out of 1929.
Robert S. McElvaine – Washington Post
“There are two ideas of government,” William Jennings Bryan declared in his 1896 “Cross of Gold” speech. “There are those who believe that if you will only legislate to make the well-to-do prosperous their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous their prosperity will find its way up through every class which rests upon them.”
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****SD: Ohhhh, at first I thought he was a historian of clinical depression…

 

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NFA Board Update – November 2017 Meeting
NFA
NFA Vice-Chairman Maureen Downs and President Tom Sexton discuss highlights and other notable information from NFA’s November Board meeting, including NFA’s upcoming Long-Range Planning meeting and Board elections. The video is intended to keep NFA Members and the investing public apprised of the important topics discussed by NFA’s Board.
/goo.gl/UbFvu6

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Thursday’s Top Three
Our top three stories were led by Carl Gilmore’s column, Other Voices: An Open Letter on Bitcoin Futures. Second went to the Business Insider piece Jump Trading CTO Hunt departs in shakeup. Third went to Business Insider’s Coinbase, Gemini exchanges face issues as bitcoin surges past $11K

 

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Lead Stories

CFTC Opens Way to Bitcoin Futures; Regulator says it will allow launches by Chicago exchanges CME Group and Cboe Global Markets
Alexander Osipovich – WSJ
The U.S. Commodity Futures Trading Commission said it will allow two major Chicago exchanges to launch bitcoin futures.
/goo.gl/MprAQQ

****SD: Not to be lost – this includes Cantor Exchange’s bitcoin binary options, too.

CME Group to launch bitcoin futures contract on Dec. 18
Reuters Staff
CME Group Inc (CME.O) on Friday said it will launch its bitcoin futures contract on Dec. 18 to provide a regulated trading platform for the cryptocurrency futures market.
/goo.gl/rXUtFZ

Brexit May Leave Banks on the Hook for Impossible Contracts
John Glover – Bloomberg
Bankers, Carney highlight risks as derivative exposure flees; Arguing Brexit made contract illegal no defense, lawyers sayr.
As far as Brexit headaches go, Barclays Plc’s John McFarlane says that while his bank is on top of job relocations, he’s more concerned about rewriting “hundreds of thousands” of contracts.
/goo.gl/3ZatmL

Coinbase ordered to give the IRS data on users trading more than $20,000
Taylor Hatmaker -TechCrunch via Yahoo
Coinbase ordered to give the IRS data on users trading more than $20,000
Most digital currencies exist in a sort of twilight state just beyond the grasp of federal regulators, but the U.S. tax authority is starting to get savvy to this whole bitcoin thing.
/goo.gl/8Pv3Mo

Goldman’s Blankfein voices prospect of being replaced by co-chiefs; Contest to succeed Wall Street bank’s head is one of the most keenly watched in finance
Ben McLannahan in New York – FT
Lloyd Blankfein has held out the prospect of being replaced by co-chief executives at Goldman Sachs, suggesting that the Wall Street bank is contemplating a break from the structure in place for the past 18 years.
/goo.gl/K1yPSY

CME Group Self-Certifies Bitcoin Futures to Launch Dec. 18
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, today announced that it has self-certified the initial listing of its Bitcoin futures contract to launch Monday, December 18, 2017.
/goo.gl/cwxfDQ

Alarm Bells Are Sounding Over Gigantic Run-Up in Momentum Stocks
Aleksandra Gjorgievska – Bloomberg
Morgan Stanley, JPMorgan say trade could be getting stretched; Rotation between stock winners/laggards becoming more frequent
One of the most lucrative strategies in stock investing this year may be heading for a pause.
/goo.gl/dmPUaX

VIX-Yield Curve: At the Door of High Volatility?
Erik Norland – CME Group
We freely admit: Figure 1 is probably the strangest chart that you will ever see, at least in finance. You may be wondering: did they throw blue spaghetti noodle on paper for inspiration and then write an economics article about it? Or, have they spent too much time with disciples of psychologist Timothy Leary, a proponent of experimenting with psychedelic drugs?
/goo.gl/2xXbRL

Bitcoin could threaten financial stability: Fed governor
Channel News Asia
Digital currencies like bitcoin could pose a threat to financial stability as they gain wider use, a chief Federal Reserve banking oversight official said on Thursday (Nov 30).
/goo.gl/5XVt2c

SEC Changes Hiring Process for In-House Judges to Address Legal Concerns; Agency says commissioners will appoint judges directly to allay worries about their legitimacy
Dave Michaels – WSJ
A gambit by the Securities and Exchange Commission to bring more enforcement actions through its in-house courts has partly backfired.
/goo.gl/6Lsz6Q

Goldman eschews bitcoin but wants to help clients crypto-trade
Olivia Oran – Reuters
Goldman Sachs Group Inc (GS.N) is trying to figure out how to cater to investors who want to trade bitcoin even though the digital currency remains too volatile for the Wall Street bank to trade itself, according to comments by a representative and its chief executive officer on Thursday.
/goo.gl/oyZ1TP

US finance leaders are least likely to embrace bitcoin, and some see a fraud: CFO survey;
Anthony Volastro – CNBC
Bitcoin could very well be the investing story of 2017, with its meteoric rise in price (up more than 1,100 percent year-over-year, according to Coinbase). Comments from billionaires and business barons who have called it a bubble ó including Jamie Dimon, Jack Bogle, Warren Buffett and Mark Cuban ó haven’t deterred believers. And you can add to the doubters’ list another group of big-name market skeptics.
/goo.gl/k2ZvwP

Trump Plans to Nominate Fifth Third’s Top Lawyer to Lead Key Banking Regulator
Jesse Hamilton – Bloomberg
Jelena McWilliams would run a key U.S. banking regulator; She would succeed FDIC Chairman Gruenberg, an Obama appointee
President Donald J. Trump plans to nominate Fifth Third Bancorp’s top lawyer to lead the Federal Deposit Insurance Corp., a key banking regulator that has been run by a Barack Obama-appointee throughout Trump’s first 11 months in office.
/goo.gl/6rKd5y

Electricity Prices Plummet as Gas, Wind Gain Traction and Demand Stalls; Texas is a microcosm of pressures facing power generators; ‘It’s too late’ for coal
Erin Ailworth and Russell Gold – WSJ
The rapid rise of wind and natural gas as sources of electricity is roiling U.S. power markets,
/goo.gl/tWRK1f

Exchanges, OTC and Clearing

Cboe Submits Product Certification for Bitcoin Futures
Cboe
Cboe Global Markets, Inc., one of the world’s largest exchange holding companies, today announced that Cboe Futures Exchange (CFE) has filed a product certification with the Commodity Futures Trading Commission (CFTC) to offer bitcoin futures trading. The product certification is subject to regulatory review.
/goo.gl/6fWQXF

Cboe selects big xyt’s Liquidity Cockpit; Cboe deploys Liquidity Cockpit to track execution quality and LIS trading activity in line with ESMA thresholds
Automated Trader
Big xyt, the independent provider of smart data and analytics capabilities, has announced that Cboe Europe Equities is using its Liquidity Cockpit, designed to give global trading and investment firms enhanced visibility over dark and lit liquidity, and the ability to navigate and analyse European market share across a market landscape in transition.
/goo.gl/KhzEoX

Cboe Reports Increasing Usage of New Complex Order Options Functionality
Cboe
Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: CBOE), one of the world’s largest exchange holding companies, has announced increasing usage of complex order functionality on its Cboe EDGX Options Exchange, one month after the new technology was launched.
/goo.gl/vbWHfu

Stock Exchange of Thailand trades domestic clouds for international providers
Melissa Chua – Asia Cloud Forum
The Stock Exchange of Thailand (SET), Thailand’s center for securities trading, began using the cloud’s compute power four years ago, primarily to enhance the stability of its stock trading platform.
/goo.gl/jJ4EVH

OCC News – November 2017
OCC
Dave Hoag, Chief Information Officer, shares his insights into the impact technology has on the exchange-listed options industry; OCC Celebrates 25 Years of OIC Educating Options Investors; OCC and EquiLend Clearing Services Bringing Greater Access to Central Clearing in Securities Financing and more.
/goo.gl/GjB2dm

London Stock Exchange sets out defence of its chairman; Activist investor TCI presses on with efforts to oust Donald Brydon
Philip Stafford – FT
The London Stock Exchange has set out a defence of its chairman Donald Brydon after an activist investor, the Children’s Investment Fund, said it would press on with efforts to oust him.
/goo.gl/2EGCYA

Euronext acquires 100 percent of Irish Stock Exchange in ‘strategic’ move
CNBC
Pan-European exchange Euronext has announced its acquisition of 100 percent of the Irish Stock Exchange (ISE) for EUR137 million ($162.48 million).
/goo.gl/PGmUjP

TP ICAP scoops up UK rival
Philip Stafford – FT
TP ICAP, the world’s largest interdealer broker, has returned to the acquisition trail by scooping up smaller UK rival Coex Partners.
/goo.gl/5skXmf

SGX: Listed Products Daily Turnover In November Averaged S$97 Million
SGX
In the month of November, SGX listed Structured Warrants, Daily Leverage Certificates (DLCs) and Exchange Traded Funds (ETFs) generated a combined daily average turnover of S$97 million with Structured Warrants contributing S$74 million (+163% Y-o-Y) of the total.
/goo.gl/Wqka38

Japan Exchange Group released Trading Overview in November 2017
Japan Exchange Group
Cash Equity Market – In November 2017, the daily average trading value for the TSE 1st Section (domestic common stocks) reached JPY 3.6648 trillion, a high in 2017.
Derivatives Market – In November 2017, total derivatives trading volume reached 38,131,495 contracts, a high since January 2016 and the highest record for November.
/goo.gl/q6nexb

At EUR 154.2 billion, cash markets posted their highest turnover since March 2015; Increase of 24 percent over the previous year
Deutsche Bˆrse Group
With a turnover of 154.2 billion euros in November, the highest turnover since March 2015 was achieved on the cash markets of Deutsche Bˆrse. In November 2016, sales still amounted to EUR 124.7 billion.
/goo.gl/Cg39yg

Markets watchdog investigates D. Boerse’s handling of new CEO hire
Reuters Staff
Germany’s financial markets watchdog BaFin is questioning Deutsche Boerse over how it communicated the appointment of Theodor Weimer as chief executive, the regulator said on Friday.
/goo.gl/Q3zfge

trueEX and Markit settle legal dispute; trueEX initially sought legal action taken following Markit’s decision to prohibit access to its trade processing service, MarkitSERV.
Hayley McDowell – The Trade
US interest rate swaps trading venue trueEX has settled a legal dispute with Markit after it sought legal action against the firm for anti-competitive reasons earlier this year.
/goo.gl/Gd9X8i

Thomas Book: “Our Total Return Futures are a real-life example of futurization.”
Eurex
One year ago, Eurex launched EURO STOXX 50Æ Index Total Return Futures. We talked to Thomas Book, CEO of Eurex, about this successful product, which offers returns analogous to Equity Index Total Return Swaps, thus representing a functional replacement for these OTC instruments.
/goo.gl/43T6qb

Liquidity Provider schemes 2018: Product Specific Supplements to the Liquidity Provider Agreement
Eurex
With the introduction of the contractual framework for Liquidity Provisioning at Eurex Deutschland and Eurex Z¸rich AG (together: the Eurex Exchanges) and Eurex Frankfurt AG, the existing, commercial Market-Making schemes will be converted into Liquidity Provider schemes as of 1 January 2018.
/goo.gl/4wHHBY

Regulatory Market-Making and Liquidity Provisioning: Implementation details
Eurex
With Eurex circular 102/17, Eurex Deutschland and Eurex Z¸rich (collectively: the Eurex Exchanges) have announced the introduction of Regulatory Market-Making and the introduction of the Eurex Liquidity Provider Framework.
/goo.gl/LVL4ev

HKEX to Revise Strike Intervals for its Most Actively Traded Stock Index Options
HKEX
Revise strike intervals for HSI, Mini-HSI, HSCEI and Mini-HSCEI options from 22 January 2018; Aim to give investors more choices for trading
Hong Kong Exchanges and Clearing Limited (HKEX) announced that it will revise the strike intervals for its four most actively traded stock index options contracts – Hang Seng Index (HSI) Options, Hang Seng China Enterprises Index (HSCEI) Options, Mini-HSI Options and Mini-HSCEI Options – from Monday, 22 January 2018 (details are shown in the table below).
/goo.gl/PUXXQi

Fintech

Machines ‘beat humans’ for a growing number of tasks; The AI Index attempts to assess overall impact of artificial intelligence
Richard Waters in San Francisco – FT
Artificial intelligence is getting close to or beating humans on a growing number of yardsticks, according to one of the first attempts to assess the overall impact of AI.
/goo.gl/deT3bC

Looking Back
Blue Trading Systems News, Events, and Highlights
As the holidays approach, we reflect on an eventful and productive 2017. Conversations with a diverse group of potential customers we met at various industry events revealed new market opportunities and began what we hope will be several mutually beneficial relationships. We adapted our strategy accordingly, broadening our focus, which has traditionally concentrated on options trading, to include futures and introduced our new product, BTS Spark.
/goo.gl/sZeojM

Money.net now has more than 80,000 subscribers
Kevin Dugan – NY Post
Money.net, an online platform for financial data and news, says it has grown its ranks of subscribers to more than a quarter the size of industry behemoth Bloomberg’s.
/goo.gl/6sVjcC

The CIO of a crypto hedge fund explains the value in cryptocurrency ó and why the market will explode over the next 2 years
Jacqui Frank, Kara Chin and Trevor N. Cadigan – Business Insider
Ari Paul, CIO of cryptocurrency hedge fund BlockTower Capital, talks with Business Insider executive editor Sara Silverstein about the value in cryptocurrency and where he thinks the market is headed in the next two years. Following is a transcript of the video.
/goo.gl/PmPEHQ

There are many reasons to be cautious about bitcoin; The craze for initial coin offerings ignores financial fundamentals
Jean Tirole – FT
The current craze for cryptocurrencies seems boundless. The dollar value of bitcoin has been multiplied by 10 since the beginning of the year, and by 30,000 since January 1 2011. “Initial coin offerings”, through which companies finance themselves by issuing “tokens” (cryptocurrencies newly minted for the occasion), have raised $3.5bn so far this year. We should be cautious of this trend: investors must be protected and regulated banks, insurance companies and pension funds should be prevented from building exposures to these instruments.
/goo.gl/3vp1UB

Politics

It’s War, and the Washington Post Knows It
Francis Wilkinson – Bloomberg
The Washington Post exposed a fraud this week, which is not particularly remarkable. But there was something unusual about it. Leading institutions of the American press sometimes behave as if they soar so high above the antics of partisan buffoons — is that a gutter I spy way down there? — that it’s hardly worth acknowledging their existence, let alone their tactics.
/bloom.bg/2kdTlG4

Legislators ponder cybersecurity of market auditing system
BY JOE UCHIL – The Hill
Members of the House Financial Services Committee mulled concerns over cybersecurity and the pace of development for a consistently delayed project to bolster Wall Street records collection during a hearing Thursday.
/goo.gl/DQoPch

Corbyn lashes out at financial sector ‘speculators and gamblers’; UK Labour leader singles out Morgan Stanley and warns he is a ‘threat’ to big banks
Jim Pickard, Chief Political Correspondent – FT
Jeremy Corbyn has labelled the financial sector “speculators and gamblers who crashed our economy”, warning global banks that operate out of the City of London that he would be a “threat” to their business if he became prime minister.
/goo.gl/xB9qKX

Trump puts talks to boost China economic ties on ice; Treasury’s David Malpass says Beijing is not liberalising economy as hoped
Sam Fleming in New York and Shawn Donnan in Washington – FT
Donald Trump’s administration has put its main programme for bolstering economic relations with China on ice as it complains about the two countries’ swollen trade imbalance, and says Beijing’s efforts to liberalise its economy have gone into reverse.
/goo.gl/mgZrfy

How Donald Trump uses tribal loyalty to drive economic optimism; Democrats beware: it might not be ‘the economy, stupid’ after all
Gillian Tett – FT
At least two big questions about tax are convulsing Washington DC this week. One is what type of tax reform bill might eventually squeak its way through Congress. The other is whether this bill will offer sweeteners to maintain voter support for President Donald Trump.
/goo.gl/Sh2taQ

Regulation

CFTC Statement on Self-Certification of Bitcoin Products by CME, CFE and Cantor Exchange
CFTC
Today, the Chicago Mercantile Exchange Inc. (CME) and the CBOE Futures Exchange (CFE) self-certified new contracts for bitcoin futures products, and the Cantor Exchange (Cantor) self-certified a new contract for bitcoin binary options.
/goo.gl/wtYiW3

SEC Charges Florida Penny Stock Operators With Defrauding Elderly Investors in Push to Crack Down on Repeat Offenders; Miami Office’s Recidivist Initiative Nets 23 Enforcement Actions to Date
SEC
The Securities and Exchange Commission today charged two individuals with defrauding elderly investors in a penny stock scheme involving Florida entertainment companies and their “Spongebuddy” product. The charges are part of the Miami Regional Office’s Recidivist Initiative which has thus far resulted in enforcement actions against 23 individuals, nine of whom also have been charged by criminal authorities.
/goo.gl/pji5Co

Division of Corporation Finance Chief Accountant Mark Kronforst to Leave SEC
SEC
The Securities and Exchange Commission today announced that Mark Kronforst, Chief Accountant of the SEC’s Division of Corporation Finance, plans to leave the SEC in early January after 13 years of public service with the investor protection agency.
/goo.gl/GKMWQi

More Than $16 Million Awarded to Two Whistleblowers
SEC
The Securities and Exchange Commission today announced awards of more than $8 million each to two whistleblowers whose critical information and continuing assistance helped the agency bring the successful underlying enforcement action.
/goo.gl/tWqA1i

SEC Ratifies Appointment of Administrative Law Judges
SEC
The Securities and Exchange Commission today announced that it has ratified its prior appointment of Chief Administrative Law Judge Brenda Murray and Administrative Law Judges Carol Fox Foelak, Cameron Elliot, James E. Grimes, and Jason S. Patil.
/goo.gl/1k5pCH

SEC short-selling focus snares Millennium over lapse in simple rule
Todd Ehret – Reuters
U.S. securities regulators on the lookout for manipulative trading violations have gotten very good at uncovering them, and firms must be on their guard to prevent infractions. This was evident last week when the U.S. Securities and Exchange Commission (SEC) settled a case that involved short-selling in stocks of companies planning follow-on secondary offerings and then illegally purchasing shares in the offerings.
reut.rs/2BzczdH

US Department Of Justice: Russian Cyber-Criminal Sentenced To 14 Years In Prison For Role In Organized Cybercrime Ring Responsible For $50 Million In Online Identity Theft And $9 Million Bank Fraud Conspiracy
Mondovisione
A Russian cyber-criminal was sentenced today to 14 years in prison for his role in a $50 million cyberfraud ring and for defrauding banks of $9 million through a hacking scheme.
bit.ly/2kdg3ye

CFTC Staff Grants Time-Limited Extension of Swap Data Reporting Relief for Certain Swap Dealers and Major Swap Participants Established under the Laws of Australia, Canada, the European Union, Japan or Switzerland
CFTC
The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (Division) today extended relief it provided certain CFTC-registered swap dealers (SD) and major swap participants (MSP) in November 2016 (CFTC Letter No. 16-79).
/goo.gl/9gti2t

ASIC bans Bell Potter Securities Ltd trader Damien Rodr from providing financial services
ASIC
ASIC has banned Mr Damien Rodr, of Sydney, from providing financial services under s920A of the Corporations Act following an ASIC investigation into trading in the shares of DirectMoney Ltd (‘DirectMoney’; ASX code: DM1).
/goo.gl/fHmZnT

Big U.S. banks in last-ditch push on regulatory relief bill
Pete Schroeder, Michelle Price, Olivia Oran – Reuters
Wall Street banks and big regional lenders are scrambling to secure changes to a U.S. Senate bill easing rules on smaller banks ahead of a key lawmaker meeting next week, several bank lobbyists told Reuters.
/goo.gl/pfvdrZ

Uncle Sam is coming after your bitcoin gains
Anora M. Gaudiano – MarketWatch
A judge’s ruling in favor of the U.S. Internal Revenue Service in its suit against Coinbase, a cryptocurrency exchange, once again proves that death and taxes are about the only certain things in life.
/goo.gl/sFKFuk

Verena Ross Keynote Address at ASIFMA Annual Conference 2017
ESMA
Verena Ross, ESMA Executive Director, gave a keynote address at the ASIFMA Annual Conference 2017 in Hong Kong. The two-day conference is one of the largest fora to discuss issues influencing the development of Asia’s capital markets.
/goo.gl/Jwttyt

Podcast: CFTC Talks EP019 CEA Chairman Kevin Hassett
CFTC
This week on CFTC Talks, we bring on Chairman of the Council of Economic Advisors, Kevin Hassett. We discuss what tax…
/goo.gl/rvkpCZ

Investing and Trading

The 12 Signs a Cheap Stock Is a ‘Value Trap’; Stocks that look cheap may never substantially rebound.
Nicholas Colas – Bloomberg
The historically high price-to-earnings ratios being placed on equities today make cheap stocks even more alluring. That makes sense, but be advised that the market is littered with “value traps” — stocks that look cheap but never substantially rebound.
/goo.gl/JMXuAW

Bitcoin is already dwarfing some of the largest financial market bubbles of all time
Patti Domm – Business Insider
Bitcoin already has the look of one of the biggest financial market bubbles of all time.
/goo.gl/iTc3Us

Bitcoin craziness spreads to Overstock, Square
Matt Egan – CNN
Bitcoin insanity is invading far-flung corners of the stock market.
/goo.gl/uWdVn5

Bubble, Bubble, Bitcoin Trouble? More Popular Than Kim Kardashian, Bigger Than Mexico
Crystal Kim – Barron’s
The price of bitcoin hasn’t recovered since it hit above $11,000 Wednesday and is now trading hands around $9,400 and falling, based on CME Group’s (ticker: CME) Bitcoin Real Time Index. Meanwhile, the Bitcoin Investment Trust (GBTC) is down more than 7% so far Thursday, according to Morningstar.
/goo.gl/AWzCHy

Cryptocurrencies could be worth ‘trillions of dollars,’ top VC says
Arjun Kharpal – Business Insider
Cryptocurrencies have a high chance of being worth trillions of dollars in the future, according to one top venture capitalist.
/goo.gl/8o25Gr

Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’
Nico Grant – Bloomberg
Bitcoin has been on a spree, but legendary investor Jack Bogle doesn’t think you should pull your money from the S&P 500 just yet.
/goo.gl/Egh3B2

MIT Study Suggests U.S. Vastly Overstates Oil Output Forecasts
Jim Polson and Tim Loh – Bloomberg
Estimates from EIA exaggerate impact of fracking technology; New well output could undershoot EIA forecasts by 10% in 2020
Turns out, America’s decade-long shale boom might just end up being a little too good to be true.
/goo.gl/S8ZCQe

This Six-Man Biotech Firm’s Stock Has Jumped 2,000% in Three Days
Joe Easton – Bloomberg
Shares of a tiny biotech firm with six employees in a business park in Oxford, England, have risen about 2,000 percent in three days.
/goo.gl/EGqU4H

Institutions

Banks with better capital will not stifle investment and growth
From David Miles, Professor of Financial Economics, Imperial College – Letter to FT
Sir, Your reports on the Bank of England stress tests repeatedly speak of banks being told to “hold” more capital (“BoE tells banks to hold extra £6bn as buffer against disruption”, November 29). The reports also talk of capital buffers as being “?.?.?.?intended to force lenders to put aside more capital?.?.?.” Lombard (November 29) adds to the impression, saying the Bank is “?.?.?.?demanding that lenders hold an extra £6bn in capital?.?.?.?”
/goo.gl/SC35FR

U.S. regional banks delve deeper into advisory services to boost growth
Sweta Singh – Reuters
Squeezed by lower loan growth as interest rates finally begin to rise, regional U.S. banks have been giving more financial advice to mid-sized companies and affluent Americans to drive revenue growth.
/goo.gl/5qkTpz

Legg Mason launches ‘cutting edge’ parental leave plan; Men and women in asset manager’s US workforce offered three months paid in full
Attracta Mooney and Jennifer Thompson – FT
Legg Mason will offer both men and women across its US workforce three months of fully paid parental leave from January as the $755bn New York-listed investment manager attempts to improve workplace equality.
/goo.gl/6nSfGf

Regions

Cradle of Cryptocurrency: Digital Money and Africa
Simon Golstein – Finance Magnates
Yesterday, the price of one bitcoin hit $10,000 for the first time, which was big news in the West. However two weeks earlier, while the coin was trading at around $8,000 at most exchanges, it had actually reached $14,000 in Zimbabwe as political crisis and economic turmoil caused people to turn to Bitcoin as a safe haven asset lest their savings be wiped out by hyperinflation.
bit.ly/2Bz9lXD

Chinese Pump Record Cash Into Hong Kong Stocks as Rally Teeters
Emma Dai and Kana Nishizawa – Bloomberg
Net inflows top $10 billion in November to fuel Hang Seng; Funds may take profit toward end of year: First Shanghai
Chinese investors have driven Hong Kong’s stock surge in November, buying a record amount of equities in the city even as concern grows that the rally is starting to lose momentum.
/goo.gl/pNzXYz

Australian Banks’ U-Turn on Misconduct Probe Is Bid to Cut Risk
Emily Cadman – Bloomberg
Government sets up Royal Commission into alleged failings; Tight deadlines, strict terms may limit potential damage
If you can’t beat ’em, join ’em. That’s the calculation Australia’s biggest banks and the government have made in deciding to cave in to pressure for a public inquiry into alleged misconduct in the financial industry.
/goo.gl/dqg9pn

Indian stock market overtakes Canada, becomes world’s eighth-biggest
Financial Express
India is now home to the world’s eighth-biggest stock market, overtaking Canada for the first time in almost a decade.
/goo.gl/azNgey

Renminbi global transactions share at multiyear low; Beijing’s ‘heavy-handed intervention’ in markets erodes currency’s international appeal
Roger Blitz in London and Hudson Lockett in Hong Kong – FT
China’s hopes of achieving global acceptance for the renminbi have been set back by data showing the share of international transactions in its currency at its lowest level in more than three and a half years.
/goo.gl/a3ENpV

Invest in Bitcoin ‘At Your Own Risk,’ Bank of France Says
Fortune
Bitcoin is a speculative asset and people who invest in it do so at their own risk, the Bank of France Governor Francois Villeroy de Galhau warned on Friday after recent volatile trading.
/goo.gl/1fGTdK

China’s AI dreams stymied by shortage of talent, with the US home to lion’s share of experts; Not only does the US lead in AI academic research, it has almost twice as many AI start-ups than China
Celia Chen – South China Morning Post
China is suffering from a serious shortage of qualified people to staff its ambitions to become a leader in artificial intelligence, part of a global mismatch as countries employ advanced computing sciences to drive the next stage of growth, according to a report released Friday.
/goo.gl/hSspRL

China banking regulator targets ‘invisible shareholders’
Gabriel Wildau – FT
China’s banking regulator is preparing new rules to forbid “invisible shareholders”, a response to the widespread use of shell companies and proxies to disguise the true owners of major Chinese banks and other companies.
/goo.gl/DdYH8W

Cold Blast Headed for Europe Won’t Faze a Very Warm 2017
Rachel Morison and Kelly Gilblom – Bloomberg
December forecast to be coolest since 2010 despite warm tail; Power, gas markets to be well-supplied unless cold is extreme
Europe’s coldest December for seven years is unlikely to derail what will probably be one of the warmest years on record.
/goo.gl/cwGd5U

Recep Tayyip Erdogan Allowed Turkish Banks to Help Iran Make Illegal Payments, Witness Says; Reza Zarrab’s testimony in trial of banker could further strain U.S.-Turkish relations
Nicole Hong – WSJ
A U.S. government witness said Thursday that Turkish President Recep Tayyip Erdogan had approved an alleged scheme to help Iran circumvent U.S. sanctions, testimony that threatens to further strain relations between the two North Atlantic Treaty Organization allies.
/goo.gl/jMgxUH

Brexit

Sweden Extends Post-Brexit Trade-Deal Olive Branch to the U.K.
Nick Rigillo – Bloomberg
Trade Minister Linde offers ‘Canada plus plus plus’ deal; Sweden still not happy with May’s promise on divorce bill
Sweden has made a post-Brexit peace offering to the U.K. by proposing an extensive free-trade agreement between the European Union and Britain that also covers financial services.
/goo.gl/QTbJJK

U.K. Backs Away From Monday Dec. 4 Deadline for Brexit Progress
Tim Ross – Bloomberg
Prime Minister’s office says working towards Dec. 14 summit; EU says it will assess U.K.’s Brexit offer on Dec. 6
The U.K. is pushing back against European Union demands to make a better offer on its divorce terms by Monday Dec. 4, amid signs that any breakthrough in Brexit talks is at risk.
/goo.gl/FAPm4s

EU Reaches First Brexit Compromise in Carbon Market Plan
Ewa Krukowska, Mathew Carr and Ian Wishart – Bloomberg
Member states approve measure to shield EU cap-and-trade; Regulation addresses U.K. concerns, protects emissions market
The European Union and the U.K. reached the first compromise on Brexit in vote on a contingency plan for the world’s biggest emissions market.
/goo.gl/wN32HQ

Brexit arrives early in Frankfurt property market; Big rise in demand for office space as financial businesses firm up relocation plans
Claire Jones and Olaf Storbeck in Frankfurt – FT
Bankers have strolled along Marienstrasse, a side street off one of the main arteries of Frankfurt’s financial district, since the 19th century. Back then they hailed from the Brentano family; soon they will come from Goldman Sachs.
/goo.gl/kcsfRh

Miscellaneous

Can Wikipedia’s Jimmy Wales fix the news?
FT
Traditional media is broken, the tech entrepreneur says. But will his new reader-funded service be any better?
/goo.gl/pGwbxh

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Graduate of University of Minnesota School of Journalism and Mass Communication