Breaking News

SEC Pours Cold Water on Prospect of Bitcoin ETFs; Rolling back regulations often comes before a financial meltdown; Bond Markets’ Last Line of Resistance Faces Digital Encroachment

First Read

Hits & Takes
JLN Staff

I will be in Washington, DC on Monday and Tuesday for the Technology Advisory Committee meeting on Tuesday at the CFTC. ~JJL

IMC was in the builtinchicago list of “The 10 coolest Chicago tech offices we saw in 2017”. ~JJL

This, from|today’s New York Times piece, “‘Every time you transfer a cryptocurrency, you might trigger a gain and pay a tax,’ said Selva Ozelli, a tax lawyer and accountant.” ~JK

There’s a new report out from WalletHub regarding 2018’s [U.S.] Cities with the Highest and Lowest Credit-Card Debts. Chicago comes in the middle – median credit-card debt is $2,541 and average months until payoff is 11. For comparison, New York is much higher – $3,447 median debt and 14 months until payoff. Los Angeles is between those two (but a lot of Californian cities qualify in what I’d call the “most generally debt free” category.) Fun to poke through. ~SD

AI was a big topic at the recent STAC Chicago conference. The New York Times today has an article about a new “A.I. Powered Equity E.T.F.” that runs most of its calculations on I.B.M.’s Watson. A person quoted in the article, however, says that the markets may yet be too complex for AI. ~SR

This YouTube video shows how the process automation team at OCC is helping various business units increase process visibility and control by rapidly transforming their legacy processes into modern digital applications. ~JJL


What A Former Costco Employee Wants You To Know
Meghan Demaria –
Working for the big-box store was definitely not in my long-term career plans, or why I’d moved to New York City, but in the months I spent working there, I learned a lot. I even started to love it.

***And old article that got me thinking about Costco and how we think about employees at one of our favorite stores. ~JK


FIA launches three new Brexit Working Groups
FIA launched three new Brexit Working Groups via which FIA members can provide their direct input into FIA’s Brexit work. FIA aims to hold the first working group call for each group in early February 2018. Agendas will be circulated in due course. Each working group will be chaired by FIA’s Head of Europe, Simon Puleston Jones, and will operate under the direction of the FIA Board’s Brexit Working Group.

***The three groups are hardly talking to one another and negotiations are contentious. ~JK


As Bitcoin Sinks, Crypto Bros Party Hard on a Blockchain Cruise
By Blake Schmidt – Bloomberg
Enthusiasts cruised from Singapore to Thailand this week; ‘Buy The Dip’ t-shirt, drones, Bitcoin-themed rap music
When 600 cryptocurrency enthusiasts set sail from Singapore on Monday night for their second annual Blockchain Cruise, the price of Bitcoin was hovering comfortably above $13,500.

***”I’m king of the world!” D’oh! ~JK


Thursday’s Top Three
Yesterday’s top read story was the FT’s piece Cboe approval shakes up stock market’s closing auction. Second went to Waters’ Chicago Code: A Profile of DRW’s Seth Thomson. Who knew you could go from comic books to DRW’s CIO? And you didn’t think we could go a day without a crypto-related item did you? ICE grabbed the third spot with Intercontinental Exchange and Blockstream Launch Consolidated Data Feed for Cryptocurrencies. Have a great weekend everyone.

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Lead Stories

SEC Pours Cold Water on Prospect of Bitcoin ETFs; Regulator warns Wall Street not to look for loopholes to offer funds tracking bitcoin
By Dave Michaels and Asjylyn Loder – WSJ
Wall Street’s top regulator on Thursday all but shut the door to approving exchange-traded funds that hold bitcoin and other cryptocurrencies, questioning whether the products could comply with rules meant to protect mom-and-pop investors.

Rolling back regulations often comes before a financial meltdown, according to 300 years of history
John Detrixhe – Quartz
The blame for financial meltdowns often focuses on irresponsible traders and greedy bankers. But politicians, whose policies sometimes fan the flames, deserve scrutiny as well, according to a fascinating analysis of booms and busts since the 18th century by Jihad Dagher, an economist at the IMF. The research serves as a warning, of sorts, as the Trump administration seeks to relax banking regulations introduced after the last crisis.

Bond Markets’ Last Line of Resistance Faces Digital Encroachment
Katie Linsell – Bloomberg
Digital platforms take aim at bond syndication desks; After MiFID II, banks must justify allocations in bond deals
In the corporate-bond market, even a few billion doesn’t get you a seat at the table.

Link Between Underwriting and Trading Is Put to the Test
Wall Street is putting a trading axiom to the test. Investment banks often say that underwriting debt and equity issues for companies brings in trading activity, and vice versa. The latest results from the country’s five big players — Bank of America, Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley — show that that’s not necessarily the case.

When Trading in Bitcoin, Keep the Tax Man in Mind
Tara Siegel Bernard – NY Times
Bitcoin may grab headlines when it skyrockets in value, as it did much of last year, or when it plunges precipitously, as it has this week.

SEC says bitcoin funds raise ‘investor protection issues’
Trevor Hunnicutt, Kanishka Sing – Reuters
The U.S. securities regulator on Thursday raised alarm about the safety of bitcoin-themed investments, telling the fund industry they want answers to their concerns before endorsing more than a dozen proposed products based on cryptocurrencies.

The U.S. No Longer Owns the Future of Freedom; Democracy is worth fighting for. But only Europe can take the lead.
Leonid Bershidsky – Bloomberg
The many critics of Freedom House can finally gloat: The think tank has turned its well-calibrated guns on the U.S. in its 2018 report on “Freedom in the World”:

U.S. Watchdog Outlines Issues With Bitcoin ETFs, Mutual Funds
Benjamin Bain – Bloomberg
Regulator asks about risks of manipulation, valuing assets; Letter suggests cryptocurrency funds are some way off
The U.S. securities regulator raised a series of investor protection concerns about cryptocurrency mutual and exchange-traded funds, the strongest sign yet that the world’s biggest market isn’t likely to see the products any time soon.

Minting Crypto Millions Isn’t What it Used to Be; Planning an ICO? You’ll find the correct term now is Token Generation Event.
Lionel Laurent – Bloomberg
In 2017, the elevator pitch for corralling the public into a hot new cryptocurrency involved a celebrity like Floyd Mayweather promising tons of money for all concerned.

Companies With Diverse Executive Teams Posted Bigger Profit Margins, Study Shows; Advancement in workplace, though, remains slow for both women and ethnic minorities, analysis found
By Vanessa Fuhrmans – WSJ
Diversity isn’t just a corporate feel-good measure. It has bottom-line benefits, a new study suggests.

Morgan Stanley Confirms Its Status as Wall Street’s New Reliable; The bank continues to meet its goals, unlike most rivals.
Gillian Tan – Bloomberg
To earn that title, Morgan Stanley under CEO James Gorman has met its strategic goals, a feat that has so far proved out of reach for most of its key rivals. These include the restructuring of its fixed-income arm (where revenue was wanting this quarter), a more generous shareholder payout plan and a stronger contribution from its crown jewel: wealth management.

Bitcoin and Ethereum Have a Hidden Power Structure, and It’s Just Been Revealed
Close examination reveals how power is being consolidated across their networks.
Mike Orcutt – Technology Review
In cryptocurrency circles, calling something “centralized” is an insult. The epithet stems from Bitcoin creator Satoshi Nakamoto’s revelation: a monetary system doesn’t need a central authority, like a government, to work. That’s such a potent idea that it’s morphed into a battle among crypto-enthusiasts between good—that is, “decentralized”— currencies and evil ones, or anything with a whiff of “centralization,” that are assumed to threaten the utopian view of cryptocurrencies as the vehicle for a new financial world order.

Time to shine a light on opaque market data pricing; Large institutions have the ability to buy ‘premium’ data packages, while those with fewer financial resources are left by the wayside
Roger Rutherford – Financial News
Is there a need for greater transparency in the way exchange groups and trading platforms charge for providing market data? A group of 24 trading institutions, including banks and asset managers, certainly think so. They have written to the Securities and Exchange Commission, requesting exchanges reveal their profit margins for market data products.

OPEC’s Casual Relationship With Hedge Funds
Liam Denning – Bloomberg
OPEC has a complicated relationship with hedge funds.
Historically, the oil exporters’ club routinely blamed “speculators” for moving oil prices too far this way or that relative to fundamental supply and demand. Let’s breeze past the irony of an organization artificially restricting supply bemoaning others for interfering with the purity of the price-setting mechanism. Instead, let’s recognize OPEC is getting a helping hand from hedge funds — albeit one that comes at a price.

Chinese tech groups undermine banks’ dominance of finance; Ant’s failure in MoneyGram bid does not signal end to US ambitions
Henny Sender – FT
The recent refusal by US regulators to sign off on Ant Financial’s $1.2bn acquisition of Dallas-based money transfer firm MoneyGram International does not signal the end of the Alibaba-affiliated payments group’s US financial ambitions.

Is Lithium the Next Canary in the Markets Mine?; Cryptocurrency miners had a bad week. Are battery-metal miners next?
Nathaniel Taplin – WSJ
What bubbly asset class—whose sky-high valuation rests on an immature, but very fashionable technology—is selling off sharply? This time the answer isn’t cryptocurrencies. We’re talking about lithium miners.

China targets cryptocurrencies in online pyramid scheme crackdown
Reuters Staff
China will crack down on online pyramid schemes, including speculation masked as cryptocurrencies and online games, the public security ministry said on Friday.

US banks’ mission to boost investor payouts sparks concern;Moves to trim capital cushions while boosting payouts is worrying, say some observers
Ben McLannahan and Alistair Gray in New York – FT
Michael Corbat was quite clear. The $22bn charge that Citigroup just took due to the overhaul of US tax laws would not — repeat not — spoil the bank’s plans to hand back at least $60bn of capital to shareholders in coming years, the chief executive said this week as he presented results for the fourth quarter.

Bain Capital founder William Bain Jr. dead at 80
By Associated Press
William Bain Jr., the founder of global consulting and private equity businesses bearing his name who helped drive the career of former Republican presidential nominee Mitt Romney, has died. He was 80.

Exchanges, OTC and Clearing

India’s NSE Seeks Singapore Delay on Stock Futures
Santanu Chakraborty and Andrea Tan – Bloomberg
SGX plans to start contracts on Feb. 5, subject to approval; Two exchanges still discussing partnerships in other areas
The National Stock Exchange of India Ltd., operator of the country’s biggest bourse, is asking Singapore Exchange Ltd. to delay the planned introduction of single-stock futures that would track some of the subcontinent’s largest companies, according to people familiar with the matter.

Simulation of Eurex Clearing’s Default Management Process from 12 March to 16 March 2018
Eurex Clearing will conduct the next simulation of its Default Management Process (DMP) from 12 March to 16 March 2018.

SGX reports 2Q FY2018 net profit of S$88 million
Singapore Exchange (SGX) today reported 2Q FY2018 net profit of S$88.4 million (S$88.3 million), against revenues of S$205.0 million (S$199.6 million). Operating profit was S$103.0 million (S$102.4 million), with earnings per share at 8.2 cents (8.2 cents). The Board of Directors has declared an interim dividend of 5 cents (5 cents) per share, payable on 5 February 2018.

Bermuda Stock Exchange Confirms Status as LEI Issuer; The exchange is able to issue LEIs to listed and unlisted Bermuda-domiciled companies.
Wei-Shen Wong – Waters Technology
Neville Caines, operations manager at the BSX, says the exchange—via its relationship with CUSIP Global Services—is issuing LEIs to listed and unlisted Bermuda-domiciled companies, in association with the Global LEI Foundation (GLEIF).

Thadaney to Leave Toronto Stock Exchange Owner TMX Group
TMX Group’s head of equity capital markets, Nicholas Thadaney, is leaving Canada’s biggest stock exchange operator after a reorganization of the company, Chief Executive Officer Lou Eccleston said.


Make Surveillance Smarter and Eliminate Blind Spots With TT Score
Jay Biondo and Morgan Trinkaus – Trading Technologies Blog
There is nothing quite like the shot of panic you feel when you receive a letter from a regulator indicating that your trading activity, or trading activity that is under your purview, is being investigated for potential market abuse. These initial letters are usually just the prelude to a long process where the only certainty is that it will be expensive and time consuming regardless of the outcome. And now that prison time is on the table for certain malicious trading behaviors, the stakes have never been higher. In 2017, the CTFC tripled the amount of enforcement actions involving disruptive trading practices, levying tens of millions of dollars in fines and permanently barring traders from CFTC regulated markets.

Hackers Have Walked Off With About 14% of Big Digital Currencies
Olga Kharif – Bloomberg
Cybercriminals compromise Bitcoin, Ether supply, blockchains; Crypto-crazed users adopt technology without weighing risks
Digital currencies and the software developed to track them have become attractive targets for cybercriminals while also creating a lucrative new market for computer-security firms.

Aquis Technologies builds connectivity hub
Aquis Technologies, the financial and regulatory technologies services arm of Aquis Exchange, has launched Aquis Market Gateway (AMG), its new connectivity hub.

Deutsche Börse Group monitors every trade with Metamako’s MetaApp 32 Network Application Platform, based on Virtex-7 FPGAs
XILINX – Xcell Daily Blog
Although Deutsche Börse Group, one of the world’s largest stock and security exchanges, already had a packet-capture and time-stamping solution in place, a major upgrade and redesign of their co-location network in 2017 added 60 Metamakos K-Series networking devices—including the company’s MetaApp 32 Network Application Platform—in to its data center in Frankfurt, Germany.

Sterling Trading Tech Named Preferred Trading Platform Provider for COR Clearing Portfolio Margin Clients
Sterling Trading Tech (STT) announced today its partnership with COR Clearing LLC to be the preferred trading platform provider for COR Clearing Portfolio Margin clients.

Standard Chartered Creates Fintech Venture
Standard Chartered has established a new business unit, SC Ventures, to lead digital innovation across the Group, invest in fintechs and other start-up companies, promote rapid testing and implementation of new business models.

Bitcoin rival’s rise unnerves banking sector; Volatility of payment settlement group’s cryptocurrency poses questions
Chloe Cornish in San Francisco and Martin Arnold in London – FT
In October, a five-year-old company called Ripple boasted that it was one of America’s “most valuable start-ups?.?.?.?after Uber, Airbnb, Palantir and WeWork”.

Data center company sues Aurora over telecom tower
Lynne Marek – Crain’s Chicago Business
Data center company CyrusOne planned to build a 350-foot telecommunications tower in Aurora on its data center property there after reaching what it thought was an exclusive arrangement with …


Cuomo Proposes Ending Carried Interest Loophole for Hedge Funds
Lynnley Browning and Henry Goldman – Bloomberg
Measure depends on nearby states adopting similar provisions; Governor’s statement has scant detail on ‘Fairness Fix’ plan
New York Governor Andrew Cuomo announced plans Thursday to target a tax break for investment fund managers in his state.

Mueller’s Probe Is Dangerously Close to a Republican Red Line; The special prosecutor has reportedly ensnared the N.R.A.
Abigail Tracy – Vanity Fair
According to McClatchy D.C., the F.B.I. is investigating whether a top Russian banker with close ties to President Vladimir Putin illegally channeled money through the N.R.A. to bolster Trump’s bid for the White House.

U.S. to dismiss charges against 129 people in Trump inaugural protests
Reuters Staff
The U.S. Justice Department intends to dismiss criminal charges against 129 defendants in connection with the protests that took place during President Donald Trump’s Jan. 20, 2017 inauguration, according to a court filing on Thursday.

Fusion GPS Head Said Trump’s Financial Woes Spurred Questions
Billy House – Bloomberg
The founder of Fusion GPS, the opposition research firm that produced an unsubstantiated dossier about Donald Trump, told a House panel that Trump’s financial practices raised allegations of possible business ties to Russian and other organized crime figures.

One Goldman Takeover That Failed: The Trump White House
James B. Stewart – NY Times
A year ago, with an impressive roster of Goldman Sachs alumni on their way to top White House positions, the return of “Government Sachs” was in full swing.


Joint statement from CFTC and SEC Enforcement Directors Regarding Virtual Currency Enforcement Actions
Joint statement from CFTC Enforcement Director James McDonald and SEC Enforcement Co-Directors Stephanie Avakian and Steven Peikin regarding virtual currency enforcement actions.

CFTC Charges Patrick K. McDonnell and His Company CabbageTech, Corp. d/b/a Coin Drop Markets with Engaging in Fraudulent Virtual Currency Scheme
The Commodity Futures Trading Commission (CFTC) on January 18, 2018, filed a federal civil enforcement action in the U.S. District Court for the Eastern District of New York against Defendants Patrick K. McDonnell, of Staten Island, New York, and CabbageTech, Corp. d/b/a Coin Drop Markets (CDM), a New York corporation, charging them with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin.

CFTC Charges Colorado Resident Dillon Michael Dean and His Company, The Entrepreneurs Headquarters Limited, with Engaging in a Bitcoin and Binary Options Fraud Scheme
The Commodity Futures Trading Commission (CFTC) on January 18, 2018 filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against Defendants Dillon Michael Dean of Longmont, Colorado, and his company The Entrepreneurs Headquarters Limited, a UK-registered company. The CFTC Complaint charges the Defendants with engaging in a fraudulent scheme to solicit Bitcoin from members of the public, misrepresenting that customers’ funds would be pooled and invested in products including binary options, making Ponzi-style payments to commodity pool participants from other participants’ funds, misappropriating pool participants’ funds, and failing to register with the CFTC as a Commodity Pool Operator (CPO) and Associated Person of a CPO, as required.

Podcast: CFTC Talks EP027: Alex Rampell, General Partner at Andreessen Horowitz
This week on CFTC Talks, CFTC’s Dan Gorfine and I bring on Andreessen Horowitz’ lead on fintech investments, Alex…

Barclays trader charged with front-running by US authorities; DoJ case relates to market manipulation before Hewlett-Packard’s takeover bid for Autonomy
Martin Arnold in London – FT
US authorities have filed criminal charges against Robert Bogucki, the US head of foreign exchange trading at Barclays, for allegedly defrauding Hewlett-Packard by front-running a £6bn options order ahead of its takeover of Autonomy.

Trump’s Bank Regulator Flags Cyber Risks in First Threat Report
Jesse Hamilton -Bloomberg
OCC’s Otting issues initial six-month report on industry risks; Competition over loans may be weakening standards, report says
U.S. banks are facing a growing threat from cyberattackers and making defense against them more complex by relying on third-party firms for support, according to a report released Thursday by Joseph Otting, the Trump administration appointee who took over a key banking regulator in November.

Bitcoin is ‘something regulators need to deal with but not ban,’ says former FDIC chair
Kellie Ell – CNBC
Amid threats of a potential ban on cryptocurrency, former FDIC Chair Sheila Bair said digital currencies such as bitcoin should be more tightly monitored but not stopped.

ESMA updates transparency calculations for MiFID II/MiFIR
The European Securities and Markets Authority (ESMA) has published today an extended version of the MiFID II/MiFIR transitional transparency calculations (TTC) for equity and bond instruments, adding further instruments.

FINRA 2018 Annual Budget Summary

FINRA Publishes Budget Summary and Financial Principles for First Time; Increases Transparency into Budget; Includes No Fee Rate Increases for Member Firms
The Financial Industry Regulatory Authority today published for the first time its Financial Guiding Principles and a summary of its budget for the coming year. The additional transparency supplements the audited annual financial report FINRA has long published, responds to feedback received during CEO Robert W. Cook’s listening tour and is another important outcome of the ongoing FINRA360 organizational review.

Margin Debt at Record Levels: Know the Risks
Like the stock market, margin debt has risen sharply in recent months. According to FINRA’s latest margin statistics, borrowing by investors in November 2017 stood at an all-time high of $627.4 billion. This is almost a $100 billion increase over margin borrowing at the end of 2016—and more than double the level of borrowing at the end of 2010.

Additional questions for CPOs on the annual pool financial statement
NFA would like to inform CPOs that two additional yes/no questions regarding virtual currency activities have been added to the annual pool financial statement cover page, which can be accessed through EasyFile (Annual Reports). These changes are effective for pool financial statements as of October 31, 2017 or later.

Investing and Trading

Why Is Volatility So Low?; We checked in with seven experts, including a Nobel laureate. They cited ‘Minsky moments,’ chaos and crowded trades.
Brandon Kochkodin – Bloomberg
Volatility was one of the never-ending talking points of 2017. Hardly a day went by without stories citing the almost eerie calm in U.S. stock markets. The Chicago Board Options Exchange Volatility Index, or VIX, finished the year with the lowest average daily level on record. During the course of the year, we saw the market’s fear gauge set a new record low when it closed at 9.14 on Nov. 3.

Is Resurgent Dr. Copper About to Relapse?
Erik Norland – CME Group
If one looks at the price of copper (Figure 1) and the implied volatility on its options (Figure 2), one might think that the metal – often referred to as Dr. Copper for its reputation as a leading prognosticator of economic health because of its widespread applications — has returned to robust health after a bad spell from 2011 to 2015. Recently, the price has been soaring, and the implied volatility low. Fundamentally, copper looks good. The global economy is expanding robustly and growth in China, copper’s single-most important market, stopped slowing two years ago. A peek below the surface, however, shows that traders have concerns that this benign situation may not last, and 2018 could prove those concerns to be valid.

This Oil Major Has a Supercomputer the Size of a Soccer Field
Chiara Albanese and Kelly Gilblom – Bloomberg
Italian company sees new supercomputer fast-tracking oil finds; Steep investments dwarfed by costs of drilling in wrong place
Big Oil is now Big Tech. So big, in fact, that Eni SpA’s new supercomputer is the size of a soccer field.

We signed the FX Global Code. Why are other signatures missing?
Ian Battye – Russell Investments
In the current environment, where every day appears to bring a new set of regulations, it may appear strange that Russell Investments is actively embracing a new set of measures, referred to as the FX Global Code, focused upon the global foreign exchange marketplace.

Fears of global crackdown fail to dampen cryptocurrency interest
Gertrude Chavez-Dreyfuss – Reuters
Worries about a crackdown by global regulators on cryptocurrency trading could slow the pace of bitcoin’s rise but should not threaten its existence, investors and market participants at a cryptocurrency conference said on Thursday.

Here’s How a Bitcoin Crash Could Bring Down the Entire Stock Market
Paul J. Lim – Money
Conventional wisdom says that even if the Bitcoin bubble pops, as it’s been threatening to lately, the damage won’t spill over into the broad stock market.

HSBC to Pay $100 Million to End U.S. Currency-Rigging Probe
Tom Schoenberg and Patricia Hurtado – Bloomberg
Bank takes deferred-prosecution deal a month after one expired; One HSBC trader has been convicted, another charged in scheme
HSBC Holdings Plc has agreed to pay about $100 million in penalties to resolve a U.S. Justice Department investigation into the rigging of currency rates, part of a probe that has already led to the conviction of one of its former bankers and charges against another.

HSBC to pay over $100 million for cheating clients
Jethro Mullen – CNN Money
Europe’s biggest bank is coughing up cash yet again over its past misdeeds.

The Great Cryptocurrency Crash?
Bloomberg Markets
Benjamin Quinlan, chief executive officer and managing partner at Quinlan and Associates, discusses the future of bitcoin and blockchain technology. He speaks on “Bloomberg Markets: Asia.”

IEA Sees ‘Explosive’ Growth in U.S. Oil Output as Prices Rally
Angelina Rascouet – Bloomberg
Gains in U.S., Canada will outweigh declines elsewhere: IEA; Oil trading near 3-year high is stimulating new crude supply
OPEC’s fear that another surge of shale oil could neutralize its production cuts might be coming true.


UBS Investors Have Targets at Top of Wishlist for Ermotti
Jan-Henrik Foerster and Patrick Winters – Bloomberg
Bank said to sound out investors on need for strategic update; Swiss lender is first European bank to report Q4 earnings
Four years ago, UBS Group AG fine-tuned its pivot to wealth management just as other parts of banking became less profitable. Now, some investors want the Swiss bank to refresh its objectives as the economy shifts into expansion mode and the firm bolsters capital.

Morgan Stanley Joins Goldman Sachs in Clearing Bitcoin Futures
Hugh Son – Bloomberg
Morgan Stanley has been clearing Bitcoin futures contracts for big institutional clients and convenes a regular meeting of executives to consider how else to engage with cryptocurrencies, Chief Financial Officer Jonathan Pruzan said.

Citigroup Predicts That This Year Will Have a Record $140 Billion of CLOs
Adam Tempkin – Bloomberg
Debts’ relative value will lure new investors, analysts say; Spreads on CLO AAA paper could dip below 75 basis points
Citigroup Inc. analysts have come up with Wall Street’s most bullish forecast yet for 2018 collateralized loan obligation sales: a record-breaking $140 billion.

Rising hedge fund stars are crushing the market, taking crown away from Einhorn, Ackman
Tae Kim – CNBC
The torch is passed as the old hedge fund guard is losing its touch in the current market.

Wall Street traders brace for meager paychecks as bonus season approaches
Catherine Ngai – Reuters
Some traders at the largest Wall Street banks are about to get big, fat zeroes for bonuses while they watch markets thrive.

Credit Suisse’s Top China Dealmaker Is to Leave the Bank
Cathy Chan and Vinicy Chan – Bloomberg
Credit Suisse Group AG’s most senior China dealmaker, Mervyn Chow, is leaving after about two decades with the Zurich-based firm, people familiar with the matter said.

BNY Mellon shares fall on plan to use tax savings on wages, investments; Share on Twitter (opens new window)
Alistair Gray – FT
Shares in Bank of New York Mellon dropped about 5 per cent on Thursday after it pledged to spend much of its tax windfall on staff and investments in the business, a sign of emerging tensions at big US companies over how to divvy up the spoils of the new law.

Larry Fink knows passive investing can’t outsource engagement; BlackRock’s move to strengthen its stewardship capabilities is a start but more needs to be done
Robin Wigglesworth – FT
Larry Fink, the chairman and chief executive of BlackRock, this week sent out his annual letter to the boards of companies in which the world’s largest asset manager has invested. This one went to heart of some thorny and important questions raised by the rampant expansion of passive investing.


Venezuelan Hyperinflation Explodes, Soaring Over 440,000 Percent
Fabiola Zerpa – Bloomberg
Cafe Con Leche Index reveals inflation that government hides; Price of cup of coffee jumped 80 percent this past week alone
If there was any doubt about whether Venezuela had sunk into an inflationary spiral, it’s gone now.

Some cryptocurrency traders in South Korea took the bitcoin ‘bloodbath’ to a whole new level
David Choi – Business Insider
Cryptocurrency trading in South Korea, the world’s third-largest digital-currency market, is a huge deal.

Virtual currency meets finance in glitzy Swiss resort
Brenna Hughes Neghaiwi – Reuters
More than a dozen billionaires flocked to the Swiss ski resort of St. Moritz this week to meet up with blockchain entrepreneurs, fund managers and government officials to discuss investing into the burgeoning cryptocurrency scene.

India sends tax notices to cryptocurrency investors as trading hits $3.5 billion
Rupam Jain, Manoj Kumar – Reuters
India has sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said.

A ‘Haven for Bitcoin’ Is Considering a Cryptocurrency Crackdown
Indonesian authorities are investigating the use of bitcoin in the holiday island of Bali, amid warnings by the central bank in Southeast Asia’s biggest economy over the risks posed by virtual currencies, an official said.

Bitcoin Be Damned. Cash Is TSMC’s Future; Flat spending and rising revenue mean one thing: more money for dividends.
Tim Culpan – Bloomberg
If you’re hung up on the potential upside (or pitfalls) of Bitcoin mining for Taiwan Semiconductor Manufacturing Co., then you may be missing an even bigger story.

As China cracks down on bitcoin, Indian cryptocurrency exchanges wait and watch
Nupur Anand – Quartz India
The Indian government does not like bitcoin, but unlike its Chinese counterpart, it is in no hurry to clamp down heavily on virtual currencies.

Switzerland just showed why bitcoin may struggle to go mainstream
David Scutt, Business Insider Australia
Of all the hurdles facing cryptocurrencies in 2018, none is larger than the threat posed by government and regulatory intervention.

China looks to call bluff on Trump trade action
Michael Martina, Kevin Yao – Reuters
As influential voices within the U.S. business community warn China that U.S. President Donald Trump is serious about tough action over Beijing’s trade practices, there is little sense of a crisis in the Chinese capital, where officials think he is bluffing.


In Brexit Britain, at Least Death Is Getting Cheaper; Dignity and Carpetright can’t escape the power of the internet.
Andrea Felsted – Bloomberg
What do carpets and coffins have in common? They are both suffering as the internet makes prices more transparent and consumers shop around. That’s the message on Friday from both Carpetright Plc, which has been floored by a slump in demand, and funeral director Dignity Plc, whose earnings will be six feet under this year.

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About Author

Bergstrom is chief information officer of John J. Lothian & Co. He edits MarketsWiki and JLN Options.