Breaking News

Ten Years After the Bear Stearns Bailout, Nobody Thinks It Would Happen Again

bear stearns bailout

First Read

Hits & Takes
JLN Staff

Stephen Hawking the physicist who reshaped cosmology has died (via Bloomberg) at the age of 76. HERE is the WSJ’s story too.~JJL

Boca Bits:

The Singapore Exchange (SGX) saw record FX trading in 2017, with notional value in FX futures of $952 billion since their launch in November 2013, as well as record trading in iron ore of 16 million contracts. It was the first exchange in Asia to offer MSCI Emerging Market futures, and in 2018 SGX plans to complete its suite of MSCI index derivatives to offer investors the ability to implement a “complete EM strategy.” 

At Tuesday’s Opening Panel on “Looking to the Future,” Blythe Masters of Digital Asset holdings said the invention of blockchain, which inspired Digital Ledger Technology (DLT) in private form, was a “genuinely extraordinary breakthrough,” although a poll of the audience concluded that artificial intelligence, rather than DLT, was the technology advancement that will have the biggest effect on the financial industry. The DTCC’s Michael Bodson said DLT will help with the friction firms in the industry are experiencing, particularly in the post trade arena, where “people are still faxing derivatives instructions,” as well as aiding transparency and helping with cyber security.

To a question about diversity in the business, in particular the pay gap between men and women, panelists suggested that advancement in the industry was a more pertinent problem than the wage gap, since pay per capita doesn’t adjust for seniority.

The audience thought the biggest growth potential for the next 24 months was in the opening of markets in China and India. Some of the biggest problems in the industry remain the shrinking of the number of FCMs, which is not expected to reverse itself any time soon, and the potential risk of balkanization of the markets and an imbalance across CCPs.

The audience thought the biggest threat to the industry in the coming 24 months will be the lack of cyber security. ~SR

Cboe’s Ed Tilly said today at the exchange’s press breakfast that he would invest in a broad portfolio of crypto assets rather than picking a winner among the myriad of coins when asked it he would take his deferred compensation in bitcoin.~JJL

Cboe’s Chris Concannon said the exchange would like to develop a crypto suite of products when the time is right from a demand and regulatory basis, which would be further down the road.~JJL

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Sponsored Content

Renato Mariotti

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FIA elects new board members at annual meeting
FIA
FIA today announced the election of directors to its board at its annual meeting in Boca Raton, Fla. Fourteen directors were elected for a two-year term.
/goo.gl/iK4rQJ

***** The big news is that Mike Dawley is retiring as chairman of the FIA board. Congratulations to Mike on a long and successful tenure. And may he continue to do God’s work even after he retires from Goldman.~JJL

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Opening remarks at Boca 2018 by Walt Lukken
FIA
Good Afternoon and welcome to the 43rd annual FIA Boca.
Over the years, Boca has come to represent more than our industry’s break from our winter hibernation. For me, Boca embodies the perennial hope, anticipation and optimism of our industry and the belief that tomorrow will be better than today.
/goo.gl/QvB8bs

***** Walt Lukken is a glass half full kind of Hoosier.~JJL

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TT at Three: The Next Wave
Rick Lane, CEO – TT
At the start of last year’s FIA Conference in Boca Raton, I wrote a blog comparing the TT platform to my twin toddlers (all three turned two that year). With another year and many milestones under their belt, my now 3 ½ year old children seem to have become…actual people. Whereas the first couple years seemed to be packed with equal parts novelty and anxiety, now life is really all about getting used to the new normal: that we have two more roommates living with us.
/goo.gl/gVPUiZ

****** I miss those days.~JJL

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RIP Professor Hawking
Jeff Bergstrom – JLN
I just wanted to add my condolences for Stephen Hawking to his family and friends. I read his book “A Brief History of Time” in my early 20’s and it opened my eyes to the wonder and grandeur of the universe we live in (I also read his other books, but that first one affected me the most). That Hawking did all he did given his medical struggles was always an inspiration to me. He was important to the world. He was important to me. He will be missed.

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Tuesday’s Top Three
Our most read story yesterday was a press release from BusinessWire, Hehmeyer Trading + Investments Launches Cryptocurrency Index Fund Commodity Pool. Second was a repeat from yesterday, Classic Chicago Magazine’s Up Close and Personal with the Goddess of Grain… Rounding out the top three is Bloomberg’s Bond Market’s Most Feared Traders Threaten Treasuries Once Again

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MarketsWiki Stats
122,011,501 pages viewed; 23,039 pages; 212,062 edits
MarketsWiki Statistics

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Lead Stories

Ten Years After the Bear Stearns Bailout, Nobody Thinks It Would Happen Again; Key players have spent the last decade arguing about what was done, defending past decisions and wondering how such a crisis would play out today
Justin Baer and Ryan Tracy – WSJ
A major investment bank careens toward bankruptcy. It has $400 billion in assets, 85 years of history and deep ties to every major bank on Wall Street. As word of its troubles spreads, a run begins, sending its stock plummeting.
/goo.gl/gwGpi4

Google to ban cryptocurrency advertisements from June
Alice Woodhouse in Hong Kong – FT
Google will ban advertisements for cryptocurrencies and initial coin offerings from June as part of a move to clamp down on unregulated financial products.
/goo.gl/CYXe9j

***** Here are the WSJ and Bloomberg stories too.~JJL

Nymex Veteran Targets Institutions With Cryptocurrency Exchange
Camila Russo – Bloomberg
The lucrative market for cryptocurrency exchanges may soon have some competition for institutional investors.
/goo.gl/fESJ3x

Blythe Masters says women in finance face ‘advancement problem’
Joe Rennison – FT
Blythe Masters, a former JPMorgan executive and founder of a company focused on applying crypto-technology to the financial industry, said that there is an “advancement problem” in the promotion of women in finance.
/goo.gl/sLsfhi

Don’t Mistake Market Calm for Being Out of the Woods
Richard Barley – The Wall Street Journal
Investors should search the past for lessons about where we are in the market cycle. 2005 was an instructive moment.
Is the fuss all over? February’s sharp fall in stocks has faded, with the S&P 500 only 3% below its January peak and up 4% for the year. The rise in Treasury yields has paused and corporate-bond spreads are still tight.
/goo.gl/X8JdYq

Trade Wars Can Be a Game of Chicken. Sometimes, Literally.
Eduardo Porter – The New York Times
Here’s a little known fact: One of the reasons the Ford F-Series pickup acquired its perch at the very top of the sales ranks of cars and trucks in the United States more than 36 years ago had a lot to do with chicken. The story: Hoping to fend off a surge of cheap American chicken into West Germany, in 1962 the European Common Market tripled the tariff on the birds to about 13.5 cents a pound. The United States struck back, of course. It imposed tariffs on brandy, a popular French export, and dextrin and potato starch to hit the Dutch.
goo.gl/AmYXMg

Bitcoin exchange in banking tie-up with Barclays; Deal will simplify deposits and withdrawals for Coinbase’s UK customers
Hannah Murphy and Chloe Cornish – FT
A major bitcoin exchange has struck a banking relationship with Barclays, a move that marks a break in the ranks of UK lenders who have been shunning the cryptocurrency industry as it comes under growing scrutiny from regulators.
/goo.gl/G8P3ym

MuniBrokers expands to ETFs, corporate bonds
Christine Albano – Bond Buyer
More in Broker dealers Technology MSRB rules Liquidity ETFs Corporate bonds
Four years after introducing its shared software platform for municipal interdealer brokers and their customers, MuniBrokers is expanding its capabilities.
/goo.gl/2ZumqZ

Hedge Funds Seek Fixes to Credit Default Swaps After Being Stung by Loopholes
Sridehar Natarajan, Nabila Ahmed – Bloomberg
Elliott, Apollo said to be among firms working on market fixes; Effort said to gain steam after controversial Hovnanian deal
A group of powerful hedge funds is banding together to repair the credit-default swaps market after a spate of manufactured defaults has threatened the usefulness of the product.
/goo.gl/bHZc8j

The Surprisingly Large Winners in a Bill to Help Small Banks; Huge custody banks like BNY Mellon and State Street would be among the biggest beneficiaries
Aaron Back – WSJ
Three of the biggest winners, in a bill meant to help small and midsize banks, are anything but.
/goo.gl/Qeywp3

Britain to consider taxing digital giants’ revenue
Paul Sandle – Reuters
Britain said it was considering taxing the revenues of internet companies like Facebook (FB.O) and Google (GOOGL.O) until international tax rules are changed to cope with digital firms that can shift sales and profits between jurisdictions.
Finance minister Philip Hammond said on Tuesday he had published a paper setting out proposals for taxing global digital firms before a meeting with his G20 counterparts later this week. Big internet companies have previously paid little tax in Europe, typically by channeling sales via countries such as Ireland and Luxembourg, which have light-touch tax regimes.
/goo.gl/LScjee

Goldman’s Solomon sets out to prove bank’s revenue engine can roar again
Catherine Ngai, Greg Roumeliotis – Reuters
Before Goldman Sachs Group Inc (GS.N) operating chief David Solomon takes the next step in his career, the 56-year-old banker will have to prove that a strategy he has championed to increase annual revenue by $5 billion can actually work.
goo.gl/bvk3ay

Broadcom Withdraws Bid for Qualcomm, Will Still Redomicile to U.S.
Cara Lombardo – The Wall Street Journal
Broadcom Ltd. withdrew its hostile bid for Qualcomm Inc. Wednesday after the Trump administration blocked it, but the Singapore-based company will continue plans to redomicile to the U.S.
goo.gl/Bx8JNb

The Surprisingly Large Winners in a Bill to Help Small Banks
Aaron Back – The Wall Street Journal
Three of the biggest winners, in a bill meant to help small and midsize banks, are anything but. The bill, championed by Senate Banking Committee Chairman Mike Crapo, would raise the threshold for stricter oversight by the Federal Reserve to $250 billion in assets from $50 billion, a boon for midsize regional lenders. It also contains measures to reduce the burden of regulation on smaller community banks.
goo.gl/sHvEYU

Ten Years After the Bear Stearns Bailout, Nobody Thinks It Would Happen Again
Justin Baer and Ryan Tracy – The Wall Street Journal
A major investment bank careens toward bankruptcy. It has $400 billion in assets, 85 years of history and deep ties to every major bank on Wall Street. As word of its troubles spreads, a run begins, sending its stock plummeting.
goo.gl/3N5SZ5

A $31 Billion Trading Halt Has Left HNA Investors Trapped
Blake Schmidt, Pei Yi Mak and Venus Feng – Bloomberg
HNA Group Co., the poster child for runaway corporate debt in China, is increasingly drawing attention to another of the nation’s financial ills: trading halts that leave stock investors trapped for weeks on end. Seven listed units of HNA have halted their shares for seven weeks or more, creating the largest swathe of frozen stock tied to a single business group in China. The suspensions, which affect $31 billion of equity, have prevented minority shareholders from selling at a time of mounting financial stress for the aviation-to-hotels conglomerate.
goo.gl/4Z7mjG

Exchanges, OTC and Clearing

ICE Benchmark Administration To Publish Test Data For The Evolution Of ICE Libor
ICE
Intercontinental Exchange, Inc., a leading operator of global exchanges and clearing houses and provider of data and listings services, announces that ICE Benchmark Administration Limited (IBA) will publish data relating to a three-month testing period during which all 20 LIBOR panel banks were required to make parallel LIBOR submissions. These parallel submissions used the evolved waterfall methodology (the “waterfall methodology”) set out in the ICE LIBOR output statement (the “output statement”).
/goo.gl/qNAZLK

TP-ICAP reveals sharp rise in costs from 2016 acquisition; World’s largest interdealer broker says £27m in savings from ICAP deal cost £79m to achieve
Philip Stafford – FT
The world’s largest interdealer broker TP ICAP has disappointed investors with full-year results that revealed a sharp rise in costs arising from a major acquisition at the end of 2016.
/goo.gl/aKdJvr

Instinet adds RFQ function to BlockMatch MTF; Traders will be able to trade RFQ on the Instinet BlockMatch trading venue alongside existing continuous, non-displayed and mid-point matching.
Hayley McDowell – The Trade
Agency broker Instinet Europe has added request for quote (RFQ) functionality to its equities multilateral trading facility (MTF) BlockMatch.
/goo.gl/y1AcPE

Ice Benchmark Administration To Publish Test Data For The Evolution Of Ice Libor
Businesswire
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announces that ICE Benchmark Administration Limited (IBA) will publish data relating to a three-month testing period during which all 20 LIBOR panel banks were required to make parallel LIBOR submissions. These parallel submissions used the evolved waterfall methodology (the “waterfall methodology”) set out in the ICE LIBOR output statement (the “output statement”).
/goo.gl/VbhuLV

Fintech

JP Morgan invests in fixed income analytics startup; JP Morgan implemented Mosaic Smart Data’s technology across its fixed income trading business in October last year.
By Hayley McDowell – The Trade
JP Morgan has taken a minority stake in fixed income, currencies and commodities (FICC) analytics startup firm Mosaic Smart Data.
/goo.gl/UnnG7R

CloudMargin Completes Design, Begins Roll-out of New User Interface and User Experience (UI/UX); Extensive Upgrade Creates Dynamic, Intuitive Interface Conducive to Meeting Changing Financial Services Landscape,
Intensive Data Needs of Growing Client Base
CloudMargin
CloudMargin, the award-winning creator of the world’s first and only collateral and margin management solution native to the cloud, announced today that it has successfully completed the design of a new User Interface and User Experience (UI/UX) for its cloud-based platform. The new UI/UX design, rolling out beginning this month, establishes a strong foundation for the company’s plans to launch several new, innovative features this year. It also enables CloudMargin to build on its connectivity and enhance clients’ interactive experience while meeting the data-intensive needs of its growing client base of major sell-side and buy-side firms.
/goo.gl/cc9z9y

Cryptocurrencies

Crypto exchanges are charging up to $1 million per ICO to list tokens: ‘It’s pure capitalism’
Oscar Williams-Grut – Business Insider
Cryptocurrency exchanges are charging between $50,000 and $1 million to list initial coin offerings, according to a Business Insider investigation. “The exchanges are where the liquidity is — it’s where the money is — so that’s where the power is just at the moment,” Michael Jackson, a partner at venture capital firm Mangrove Partners, told BI. Exchanges are dominant now but that may change with tougher regulations and more standardised business models. LONDON — Cryptocurrency exchanges are charging up to $1 million to list initial coin offerings on their platforms, according to multiple industry sources. Around half a dozen market participants, from investors to CEOs of companies with their own coins, told Business Insider that some exchanges are charging anywhere between $50,000 to $1 million to get their tokens listed.
/goo.gl/VVYTM9

Digital currency sales face rocky path with more regulatory focus
Gertrude Chavez-Dreyfuss – Reuters
A global regulatory crackdown on cryptocurrencies created by startups to finance new projects could slow the pace of virtual currency sales as questions mount about their transparency and the risk of scams for investors. More than 500 digital technology startups around the world have raised funds by selling their own cryptocurrencies, or tokens, that sidestep banks or venture capital firms as intermediaries. The huge investment in the largely unregulated market, which began in 2009 with the launch of bitcoin and includes more than 1,200 tokens, has turned the financial world on its heels, especially as a stunning bitcoin rally in 2017 attracted speculators and stoked concerns about a bubble.
goo.gl/hsyxvc

PwC testing a blockchain analytics tool for tracking the global footprint of ICO tokens
Georgina Lee – South China Morning Post
Accounting firm PwC is testing a blockchain analytics tool to help trace digital tokens after their launch, helping companies to guard against the risk their tokens will be misused as a medium for money laundering and other crimes.
/goo.gl/Y7iJ1i

Crypto exchanges are charging up to $1 million per ICO to list tokens: ‘It’s pure capitalism’
Oscar Williams-Grut – Business Insider
Cryptocurrency exchanges are charging up to $1 million to list initial coin offerings on their platforms, according to multiple industry sources.
/goo.gl/aHRYvy

Digital currency sales face rocky path with more regulatory focus
Gertrude Chavez-Dreyfuss – Reuters
A global regulatory crackdown on cryptocurrencies created by startups to finance new projects could slow the pace of virtual currency sales as questions mount about their transparency and the risk of scams for investors.
/goo.gl/tL1cqq

German antitrust head plans third digital market investigation
Foo Yun Chee – Reuters
German antitrust regulators plan to open its third investigation into the digital market soon, its chief said on Tuesday, sending a warning to tech companies not to abuse their dominance or misuse their collection of personal data.
/goo.gl/h8DFb9

Coinbase Gets a U.K. Money License and Reportedly a Bank Account
Lily Katz – Bloomberg
Coinbase Inc., one of the largest cryptocurrency exchanges, said it obtained an e-money license in the U.K. as it expands services in Europe. A local subsidiary also opened an account at Barclays Plc, easing deposits and withdrawal for clients, the Financial Times said.
/goo.gl/djtKhg

Google to Ban Cryptocurrency, Initial Coin Offering Ads
Mark Bergan – Bloomberg
Policy change comes with report on ‘bad ads’ crackdown; Search giant follows Facebook’s ban on crypto ads in January
Google will ban online advertisements promoting cryptocurrencies and initial coin offerings starting in June, part of a broader crackdown on the marketing of a new breed of high-risk financial products.

Indonesian Bitcoin Investors Set to Outnumber Stock Participants
Fathiy Dahrul – Harry Suhartono – Bloomberg
The biggest Indonesian platform to buy and sell digital currency may soon have more members than the nation’s century-old stock exchange.
/goo.gl/yXzxFY

Politics

Trump ousts Tillerson, will replace him as secretary of state with CIA chief Pompeo
Ashley Parker, Philip Rucker, John Hudson and Carol D. Leonnig – The Washington Post
President Trump asked Secretary of State Rex Tillerson to step aside after months of disagreement, and picked CIA Director Mike Pompeo to replace him.
President Trump said Tuesday he has ousted Secretary of State Rex Tillerson and plans to nominate CIA Director Mike Pompeo to replace him as the nation’s top diplomat, orchestrating a major change to his national security team amid delicate outreach that includes possible talks with North Korea.
/goo.gl/mkkg7p

Trump Shuffles Team by Firing Tillerson and Tapping CIA’s Pompeo
Nick Wadhams – Bloomberg
Top diplomat doesn’t thank or praise Trump in farewell remarks; Ouster signals shift in Trump’s approach to Iran, North Korea
Bloomberg’s Nick Wadhams reports on the firing of Secretary of State Rex Tillerson.
President Donald Trump ousted U.S. Secretary of State Rex Tillerson on Tuesday, ending a rocky tenure in an abrupt move that stunned the former Exxon Mobil Corp. CEO and set in motion a shakeup of the administration’s foreign policy team.
/goo.gl/sfdP1h

Trump’s Personal Assistant Fired Over Security Issue; Problems related to online gambling and mishandling taxes prevented John McEntee from gaining necessary security clearance
Michael C. Bender and Rebecca Ballhaus – WSJ
President Donald Trump’s personal assistant, John McEntee, was fired and escorted from the White House on Monday after being denied a security clearance over financial problems in his background, according to senior administration officials and people close to the former aide.
/goo.gl/o87BwE

Trade Wars Can Be a Game of Chicken. Sometimes, Literally.
Eduardo Porter – NY Times
Here’s a little known fact: One of the reasons the Ford F-Series pickup acquired its perch at the very top of the sales ranks of cars and trucks in the United States more than 36 years ago had a lot to do with chicken.
/goo.gl/7wGMng

Attention, President Trump: Talented people won’t work for a boss who discredits and undermines them in public
Ashley Pratte – CNN
President Donald Trump has ousted another senior Cabinet official, Secretary of State Rex Tillerson. The two men had apparently rarely seen eye to eye on foreign policy, so while the firing isn’t shocking, the timing is.
/goo.gl/9wCT8y

Trump Moves Closer to Presidency of One With Tillerson Firing
Toluse Olorunnipa, Nick Wadhams – Bloomberg
Removing constraints on a leader determined to pursue own path; Pivot as critical choices loom on North Korea, Iran and trade
Robert Hormats, vice chairman at Kissinger Associates, discusses Rex Tillerson’s firing.
In accepting the Republican nomination for president in 2016, Donald Trump described a nation plagued with problems and declared: “I alone can fix it.”
/goo.gl/M4hR3y

As Oil Rally Fades, Trump’s Iran Hawk Pick Seen Aiding Bulls
Sharon Cho – Bloomberg
Pompeo nomination seen raising risk of sanctions targeting oil; Collapse of Iran nuclear deal could curb OPEC nation’s exports
For those in the oil market, it may seem like there’s no end to U.S. events determining the course of prices these days. Donald Trump’s sudden firing of Rex Tillerson is unlikely to prove an exception.
/goo.gl/5DKTKV

Regulation

German antitrust head plans third digital market investigation
Foo Yun Chee – Reuters
German antitrust regulators plan to open its third investigation into the digital market soon, its chief said on Tuesday, sending a warning to tech companies not to abuse their dominance or misuse their collection of personal data. The comments underline growing regulatory concerns across Europe about the collection of personal data by tech companies. Last month, the Federal Cartel Office kicked off a sector inquiry into online advertising after advertisers and publishers voiced worries about Google and Facebook’s strong market position. The move came two months after it launched a sector inquiry to find out how smart TV makers handled user data and the terms of their contracts. Smart TVs, which allow viewers to receive and transmit their user data, have become increasingly popular. “There will be a third one (sector inquiry) in a short period of time which we are hoping to get out,” antitrust chief Andreas Mundt told a conference organized by the Studienvereinigung Kartellrecht association.
goo.gl/qGwGdz

Statement of CFTC Commissioner Brian Quintenz on a Proposal by Cameron and Tyler Winklevoss for a Virtual Commodity SRO
CFTC
I congratulate Cameron and Tyler Winklevoss on their energetic leadership and thoughtful approach in outlining a virtual commodity self-regulatory organization (SRO) concept.
/goo.gl/oKRmwb

FCA calls on banks to reform company culture; Regulator blames institutions rather than individuals for string of conduct failings
Nicholas Megaw, Retail Banking Correspondent – FT
The UK’s financial regulator has called for banks and other financial services companies to reform their institutions in a report that blames bad culture, rather than individuals, for conduct failings since the financial crisis.
/goo.gl/dZ5qVX

Statement of CFTC Commissioner Brian Quintenz on a Proposal by Cameron and Tyler Winklevoss for a Virtual Commodity SRO
I congratulate Cameron and Tyler Winklevoss on their energetic leadership and thoughtful approach in outlining a virtual commodity self-regulatory organization (SRO) concept. Ultimately, a virtual commodity SRO that has the most independence from its membership, the most diversity of views, and the strongest ability to discover, reveal, and punish wrongdoing will add the most integrity to these markets. I encourage Gemini (or any other market participant, advocacy group, platform, or firm) to be aggressive in promoting these qualities within any SRO construct.
/goo.gl/uaQhAC

Investing and Trading

Half of investors will own an ETF by 2020: BlackRock
Ryan Vlastelica – MarketWatch
Last year, just 25% of investors owned an ETF.
Exchange-traded funds, long one of the fastest-growing segments of Wall Street, could become the dominant investing vehicle in just a few years — not even 30 years after they were first introduced.
According to a BlackRock survey, ETFs are just two years away from hitting a remarkable milestone, where half of all U.S. investors have a position in at least one ETF.
/goo.gl/KSTx39

U.S. LIBOR/OIS spread seen widening to 50 bps: Bank of America Merrill Lynch
Reuters Staff
A measure of stress in U.S. dollar funding is expected to intensify into the end of first quarter due to a rising supply of Treasury bills and maturing short-term bank debt, Bank of America Merrill Lynch analysts said on Tuesday.
/goo.gl/jHJUR3

Investors Hate Leverage Like It’s 2009, According to This Metric
By Dani Burger – Bloomberg
Long-short bet on indebted stocks tumbles amid rising rates; Cash-rich technology stocks lead gains in U.S. stocks
The expansive stock rally over the past year masks an ugly truth: investors are worried about corporate debt as tighter monetary policies loom.
/goo.gl/HtSgYC

U.S. LIBOR/OIS spread seen widening to 50 bps: Bank of America Merrill Lynch
Richard Leong and Reuters Staff – Reuters
A measure of stress in U.S. dollar funding is expected to intensify into the end of first quarter due to a rising supply of Treasury bills and maturing short-term bank debt, Bank of America Merrill Lynch analysts said on Tuesday.
The spread on the three-month London interbank offered rate (LIBOR) and three-month overnight indexed swap rate may widen to 50 basis points before gradually easing in the second quarter. On Tuesday, the spread reached 48.45 basis points, the widest since January 2012, the analysts wrote in a research note.
/goo.gl/T2PjxJ

Institutions

Goldman Succession Battle: Tame, Placid, Bald; The future of Wall Street came down to a runoff between a pair of look-alikes.
Matt Levine – Bloomberg
“If I come over to your house at Thanksgiving and I sharpen your knife, you will definitively know the difference right away,” Goldman Sachs Group Inc. Co-President Harvey Schwartz told the New York Times in November, and while he was talking about his early job working in a butcher shop, there was at least the hint of a metaphor. Schwartz, a karate black belt and expert knife-sharpener, was locked in a succession battle with his co-president David Solomon, whose extracurricular activities run toward electronic music DJ’ing, eating at fancy restaurants and drinking expensive wine. While Solomon was partying, Schwartz studied the blade.
/goo.gl/EVdhFt

Swiss Cities Top Europe Survey for Traces of Cocaine
Hugo Miller – Bloomberg
5 Swiss cities make Europe Top 10 for evidence of cocaine use; Researchers studied wastewater for traces of drug in 60 cities
Swiss financial centers, shunned by some British hedge fund managers for lacking culture and nightlife, are vying with London in a less celebrated ranking: cocaine consumption.
/goo.gl/zQ75e5

TP-ICAP reveals sharp rise in costs from 2016 acquisition
Philip Stafford – Financial Times
The world’s largest interdealer broker TP ICAP has disappointed investors with full-year results that revealed a sharp rise in costs arising from a major acquisition at the end of 2016. The London broker formerly known as Tullett Prebon revealed savings of £27m from the deal in 2017 — its first year owning the global broking business of rival ICAP. This was against a previous target of £10m and was helped by cutting 295 jobs. But the cost of achieving the savings, said the broker, was £79m, double its previous market guidance. Shares in TP ICAP fell 10.5 per cent in response, to a four-month low.
/goo.gl/usmTS5

Regions

China’s Super-Regulator Can’t Kill Shadow Banking
Nathaniel Taplin – The Wall Street Journal
Tackling risks in China’s labyrinthine financial system is often compared with a game of whack-a-mole: knock down one risk and another pops up somewhere else.
It doesn’t help when no one has a very big hammer or reliable mole data.
/goo.gl/8a6MEQ

China’s sovereign wealth fund sells stake in Blackstone; CIC’s move comes amid mounting trade tensions between Washington and Beijing
Henny Sender in Hong Kong and Lucy Hornby in Beijing – FT
China’s sovereign wealth fund has sold its stake in Blackstone, ending a controversial 11-year ownership of the US private equity group that reflected early attempts by Beijing to broaden its international investments.
/goo.gl/E4TPrw

Not a Single Japanese 10-Year Bond Traded Tuesday: Death by BOJ
Chris Anstey, Hidenori Yamanaka
Some jobs might be threatened by automation. But when it comes to government bond trading in Japan, the biggest threat might be the country’s central bank.
/goo.gl/jFLEkv

Britain to consider taxing digital giants’ revenue
Paul Sandle – Reuters
Britain said it was considering taxing the revenues of internet companies like Facebook (FB.O) and Google (GOOGL.O) until international tax rules are changed to cope with digital firms that can shift sales and profits between jurisdictions.
/goo.gl/KaXDUc

A $31 Billion Trading Halt Has Left HNA Investors Trapped
Blake Schmidt, Pei Yi Mak and Venus Feng – Bloomberg
Seven units of the conglomerate have been suspended for weeks;It’s the largest chunk of China’s $456 billion in halted stock
HNA Group Co., the poster child for runaway corporate debt in China, is increasingly drawing attention to another of the nation’s financial ills: trading halts that leave stock investors trapped for weeks on end.
/goo.gl/m1Ro2a

Miscellaneous

Once Synonymous With Wall Street, Harry’s Revamps for New Clientele; After a million-dollar redesign, the storied dining room tries appealing to a new downtown crowd with pasta and cocktails.
By Kate Krader – Bloomberg
In the 1970s, Harry’s was the only place to go downtown. Steps from the New York Stock Exchange, the restaurant would get so packed after work that traders, no strangers to a scrum, couldn’t push their way past the door. According to legend, the action on a Friday night was like an alcohol-sodden Animal House frat party.
/goo.gl/CKsks3

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About Author

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