Breaking News

America’s Largest Private Company Reboots a 153-Year-Old Strategy


First Read

Hits & Takes
JLN Staff

Thank you to all who showed the JLN Team, including my son Robby, such incredible courtesy at IDX last week. Robby had a great experience and it was greatly enhanced by the friendly and professional manner in which he was engaged at the conference.~JJL

At last week’s FIA IDX panel on crypto, a poll of the audience on the prospects for crypto-based products showed that 42 percent thought it was a “long-term sustainable” market/product, 32 percent said medium-term and 25 percent said it was short-term, or a flash in the pan.~JK

Thou shalt not bear false witness against thy neighbor.~JJL

Thou shalt not covet thy neighbor’s goods.~JJL

The Palestine Exchange (PEX) will be closed Thursday through Tuesday 14-19 of June 2018, celebrating the Eid Al-Fitr holiday. Business will resume as usual on Tuesday 19/06/2018.~JJL

The title says it all – A photo from the G7 perfectly captured Trump vs. the rest of the world.~SD

Looking for a different perspective? Need a reminder why different perspectives are important? Check out the blog from CFA Institute last week, Billions of Reasons to Be Yourself, which lays out some of the reasons why employees hide particular personality traits and why that can be a problem.~SD


Trump Tries to Destroy the West
David Leonhardt – NY Times
The alliance between the United States and Western Europe has accomplished great things. It won two world wars in the first half of the 20th century. Then it expanded to include its former enemies and went on to win the Cold War, help spread democracy and build the highest living standards the world has ever known. President Trump is trying to destroy that alliance.

***** The West will survive Trump.~JJL


CME’s Options Electronification Boom and Global Participation

CME Group’s deal to acquire NEX and become a Treasury behemoth grabbed recent headlines, overshadowing the fact that the exchange group’s options franchise has been growing like gangbusters on the screen and globally.

Recent records – there are a slew – are no happy accident.

In this video, Derek Sammann, ?CME’s senior managing director, global head of commodities and options products, covers the catalysts behind this multi-year growth story.

Watch the video and read the rest »


IBM builds world’s most powerful supercomputer to crack AI
Richard Waters – Financial Times
An IBM-designed US supercomputer unveiled on Friday is set to leapfrog Chinese competition to become the world’s most powerful for the first time in more than five years.
The machine, built by IBM for the Department of Energy’s Oak Ridge National Laboratory, has more than double the capacity of the current world leader, China’s Sunway TaihuLight.

****JB: One potential use this computer could be put to is detecting financial fraud – but I am betting it will be used to mine Bitcoins.


Venezuela hopes to tackle the world’s worst inflation by deleting zeros from its currency
Rachelle Krygier and Anthony Faiola – The Washington Post
Economic pledges may be par for the course in election campaigns, but in hyperinflationary Venezuela, the candidates’ dueling promises are going further, with the incumbent vowing to lop a few zeros off the currency, while his main challenger calls for the adoption of the U.S. dollar.
President Nicolás Maduro late Thursday briefly outlined his monetary rescue plan. In a country where a dozen eggs can cost 250,000 bolivars ($5) amid worsening inflation, he would chop three zeros off the currency — arguably bringing the price for those eggs down to 250.

****JB: That’ll fix their problems. /s


Subject: Transaction fee pilot 82873 (file s7-05-18)
From: Danny Mulson
Dear Mr Fields
Let me start by apologizing for my tardy response, to your request for comments. My dad has routinely tried to impress upon me the need to meet deadlines. In my defence I have been busy with mid term exams, at Aberdeen High, and only became concerned about this debate in recent days.

***** Tenth grader’s letter to the SEC.


Swap De Minimis; Omnibus Accounts; LIBOR, Bribery; Digital Representations
Gary DeWaal – Bridging the Week
Last week, the Commodity Futures Trading Commission proposed to leave good enough alone and not decrease the swap de minimis threshold from US $8 billion to US $3 billion as of year-end 2019. Additionally, the CFTC proposed not to include in the calculation of a person’s swap dealing activity to consider against the de minimis level, swaps that constitute hedges of both physical and financial positions (as opposed to just physical positions, as now), and asked whether executed and/or cleared swaps should also be excluded. Unrelatedly, the Joint Audit Committee issued a reminder regarding the dos and don’ts of handling omnibus accounts. But why now?


Friday’s Top Three
Our top three stories from Friday were led by the FT’s SocGen executives ordered Libor rigging, US prosecutors believed. Second went to the FT’s piece Who really owns bitcoin now? Third went to the Telegraph’s profile of Michael Spencer, I don’t want to end my career on a losing battle.”


MarketsWiki Stats
127,726,627 pages viewed; 23,154 pages; 213,336 edits
MarketsWiki Statistics


Lead Stories

America’s Largest Private Company Reboots a 153-Year-Old Strategy
Mario Parker, Javier Blas – Bloomberg
William Wallace Cargill pioneered the modern agricultural trading industry in 1865 when he established a string of grain warehouses across the American Midwest. Having a deep-pocketed buyer that could take delivery locally gave farmers an easy way to quickly get cash for their crops, lest they rot in the field waiting on a sale or transport to a faraway market. The ability to store huge amounts of grain also gave Cargill the flexibility to time his own sales to maximize the spread between what he paid farmers and what he could get from distant food processors or exporters.

ICE abandons attempt to unseat CME in grain futures; Corn, wheat and soyabean contracts launched in 2012 failed to attract liquidity
Gregory Meyer – FT
Intercontinental Exchange is pulling the plug on US corn, wheat and soyabean futures products after an unsuccessful attempt to storm Chicago’s fortress of grain trading.

U.S. Regulator Demands Trading Data From Bitcoin Exchanges in Manipulation Probe; CFTC frustrated by dispute over access to bitcoin trading data tied to futures pricing
Gabriel T. Rubin, Dave Michaels and Alexander Osipovich – WSJ
Government investigators have demanded that several bitcoin exchanges hand over comprehensive trading data to assist a probe into whether manipulation is distorting prices in markets linked to the cryptocurrency, according to people familiar with the matter.

Swiss Reject Plan That Would Have Revolutionized Banking
Catherine Bosley – Bloomberg
Sovereign money initiative rejected by 75.7% of voters; SNB’s Jordan, finance industry vociferously opposed measure
Switzerland dismissed a proposal to radically change the way banks lend money, a victory for the financial establishment including central bank chief Thomas Jordan.

Germany backs call for shifting euro clearing from London after Brexit; Finance minister suggests Frankfurt as future hub for euro clearing
Olaf Storbeck in Frankfurt and Philip Stafford in London – FT
Germany’s finance minister Olaf Scholz has called for the re-location of London’s euro clearing business after Brexit and suggested it should move to Frankfurt.

Systemic risks feared as Amazon cloud eats finance; Group of world’s largest fund managers latest to sign up to AWS, prompting concerns over industry safety
Yolanda Bobeldijk – Financial News
Technology experts have raised fresh concerns about the financial sector’s over-reliance on Amazon after it emerged several large asset managers have started using the e-commerce giant’s cloud platform. Financial News has learnt that the US technology company, which already counts a slew of banks, regulators and fintech firms among its customer base, also works with four of the largest fund managers in the world.

Blockchain Firm R3 Is Running Out of Money, Sources Say
Jeff John Roberts – Fortune
R3, a startup that last year announced it had raised $107 million to bring blockchain services to the financial sector, is floundering and could be out of money by early next year, according to two former employees of the company.

Economists reject Trump claims of unfair trade system; President misunderstands what matters for US business, say experts
Delphine Strauss in London – FT
Donald Trump raged against his G7 allies this week, accusing them of charging the US “massive” tariffs and erecting barriers to keep American farmers out.

Deutsche shareholders call for bank to ditch US arm; The embattled German lender has a large US component that has struggled to make its mark
Chris Newlands, Paul Clarke and David Ricketts – Financial News
Deutsche Bank has come under renewed pressure from investors to dump or drastically shrink its US investment bank as the German lender struggles with a litany of problems that have dragged its share price down to record lows.

Robert Rubin’s Legacy Up for Debate 10 Years After Citigroup Bailout; Once deemed by Bill Clinton to be the ‘greatest secretary of the Treasury since Alexander Hamilton’
Telis Demos – WSJ
A decade after the financial crisis, The Wall Street Journal has checked in on dozens of the bankers, government officials, chief executives, hedge-fund managers and others who left a mark on that period to find out what they are doing now. Today, we spotlight Goldman Sachs CEO Lloyd Blankfein and former Citigroup executive and Treasury Secretary Robert Rubin.

Investors clash over call to rejig Big Tech in MSCI indices; Index provider set to decide policy on contentious dual-class shares by June 21
Attracta Mooney – FT
The world’s biggest investors have clashed over whether Alphabet, Facebook and other companies with unequal shareholder voting rights should face tough restrictions in MSCI indices in a sign of growing debate over the idea of “one share, one vote”.

SocGen’s Albert Edwards says his ‘Ice Age Thesis’ is coming; Politicians will blame central banks when the next financial crisis arrives
Paul Murphy – FT
The year was 1995 and, for market strategist Albert Edwards, a nasty piece of feedback had just arrived from the Far East.

The ‘Fiduciary Rule’ May Sound Boring, But Its Collapse Threatens Your Retirement; The Obama-era rule made financial advisers working with retirement accounts put clients’ interests first.
Katherine Chiglinsky – Bloomberg
Among all the financial reforms launched during the Obama administration, the fiduciary rule may have been the most important to ordinary investors. Issued by the Department of Labor in 2016, the rule required brokers working with retirement accounts to put clients’ interests ahead of their own—for example, by recommending an annuity that was better for the client rather than one from a company that paid the broker a bigger commission. The regulation was hailed as an historic win by consumer advocates, and the financial-services industry began remaking many of its products and pay structures to comply.

ETF price war extends to new corners of the market; Fixed income and gold funds are being sold with lowest-ever fees
Robin Wigglesworth in New York – FT
The exchange-traded fund price war is intensifying and spreading, with BlackRock chainsawing the costs of $50bn worth of ETFs and investors continuing to flood into the cheapest options in the passive investment industry.

Exchanges, OTC and Clearing

Reactions to the CME NEX Acquisition at the Fixed Income Leaders Summit
Jim Greco – Trading Places
On March 29, CME Group announced a deal to acquire NEX Group for $5.5 billion. The merger combines the largest U.S. Treasury interdealer broker (BrokerTec) and futures exchange (CME). Yesterday, I spoke with twelve market participants about their thoughts on the merger at the Fixed Income Leaders Summit in Boston. Most asked to talk on background because they were not able to speak on behalf of their company.

Nasdaq’s Hong Kong data centre tie-up to give middle class Chinese investors real-time edge; From July, Nasdaq will provide its Asia-Pacific customers direct access to its market data via three data centres in Hong Kong
Laura He – South China Morning Post
Nasdaq has tied up with three data centres in Hong Kong to offer investors in the region quicker, easier and less expensive access to data from US financial markets, with an eye on China’s growing pool of middle class investors who are seeking overseas investment opportunities and asset diversification.

Cboe periodic auction broker priority allocations drops; Cboe says non-broker priority allocations within its periodic auction book has risen to 80%.
Hayley McDowell – The Trade
The percentage of broker priority allocations on Cboe Global Markets’ periodic auction dropped in May, according to the exchange group’s monthly statistics for European equities.

Cowen’s information chief relocates to London for role at LSEG; Ann Neidenbach joins LSEG as CIO for shared services and will move to London from New York in September.
Hayley McDowell – The Trade
The former chief information officer at Cowen in New York will relocate to London for a new role with the London Stock Exchange Group (LSEG).

Extension of product scope for Eurex EnLight
Eurex Deutschland has recently launched its electronic request-for-quote (RFQ) service called Eurex EnLight in order to provide Trading Participants a platform to electronically negotiate off-book transactions. With this service, Eurex Deutschland aims to support Trading Participants in proving compliance with the “best execution-requirement” under MiFID II and to improve overall operational efficiency and transparency.

FX Options: Extension of trading hours
Following the introduction of extended trading and clearing hours (23 hours) for FX Futures in February 2017, the Management Board of Eurex Deutschland prepares the migration of the FX Options to the T7/FX trading system and extends trading of FX Options to 23 hours.

Hong Kong Exchanges and Clearing Limited (HKEX) and Tokyo Commodity Exchange (TOCOM) today (Monday) signed a Memorandum of Understanding (MOU) to further promote their cooperation through information exchanges, staff exchanges, product development and joint promotion.


Yahoo Messenger is shutting down on July 17, redirects users to group messaging app Squirrel
Ingrid Lunden- Techcrunch
It’s the end of an era for Yahoo Messenger, one of the first instant messaging apps on the market. Today, Oath (which also owns TechCrunch) announced that it would be winding down the service on July 17 as it continues to experiment and consider how and if it can have a relevant place in the messaging landscape amid huge domination from Facebook and others in mobile apps.

London vies with Paris in a tale of two tech cities; An entente cordiale would be good for the European tech sector
As London Tech Week begins, the city can take pride in its status as Europe’s start-up hub. It is not guaranteed to retain the crown. The UK government must ensure that funding, supply chain, regulation and employment conditions are and remain optimal.


‘Bitcoin whales’ control third of market with $37.5bn holdings; Wealth in nascent cryptocurrency concentrated in mystery group of 1,600 investors
Hannah Murphy – FT
A mysterious cluster of 1,600 investors known colloquially as “bitcoin whales” collectively hold $37.5bn of the cryptocurrency, or close to a third of the available total, revealing the extent to which wealth is concentrated in the nascent market.

A hacker made $120,000 hunting for bugs in the ‘flawed’ software of a cryptocurrency startup that raised a record-breaking $4 billion ICO
Zoë Bernard – Business Insider
Last week, Guido Vranken made $120,000 from his laptop while sitting in his living room. Vranken has spent the past few days combing through the source code of Eos, the software created by the blockchain company

You Don’t Have to Own Crypto to Make Money Off of It
Rob Urban – Bloomberg
Pick-and-shovel companies don’t have to choose sides to win; Competition to be first to market heats up in blockchain world
To make his fortune on cryptocurrency, Jake Benson doesn’t have to choose a winner among the hundreds of firms hawking digital tokens. He just needs to do their taxes.

Bitcoin has lost more than half its value since last year’s all-time high
Ars Technica
Amid fall, mining energy demand remains so high that Quebec utility halts new orders.
Such fluctuations don’t seem to have stopped demand for setting up new mining operations, particularly in areas where electrical power is relatively inexpensive. Demand is so high in one part of Canada that Hydro-Québec, the province’s energy utility, recently said that it would “temporarily” stop accepting energy requests from cryptocurrency mining companies “so that the company can continue to fulfill its obligations to supply electricity to all of Québec.”

Korean crypto exchange Coinrail loses over $40M in tokens following a hack
Jon Russell – TechCrunch
Another day, another crypto hack. This time it’s Korea, the crypto-mad Asian country, where an exchange called Coinrail lost more than $40 million in altcoins, ICO-issued tokens that aren’t bitcoin or Ethereum, after it was hit by an apparent attack over the weekend.

Bitcoin tumbles as hackers hit South Korean exchange Coinrail
Reuters Staff
South Korean cryptocurrency exchange Coinrail said it was hacked over the weekend, sparking a steep fall in bitcoin amid renewed concerns about security at virtual currency exchanges as global policy makers struggled to regulate trading in the digital asset.

Cryptocurrencies Lose $42 Billion After South Korean Bourse Hack
Eric Lam, Jiyeun Lee, and Jordan Robertson – Bloomberg
Theft from Coinrail renews concerns about exchange security; Bitcoin drops 12% from Friday, extending its 2018 retreat
The 2018 selloff in cryptocurrencies deepened, wiping out $42 billion of market value over the weekend and extending this year’s slump in Bitcoin to more than 50 percent.


Trump Shocks Leaders With Trudeau Insult to Upend G-7 Summit
Josh Wingrove, Sarah McGregor, and Jennifer Epstein – Bloomberg
President criticizes Trudeau for comments made in briefing; G-7 had already released copies of summit final communique
President Donald Trump broadsided his allies and upended a Group of Seven meeting just as it wound up — disavowing a joint statement the U.S. had agreed to, lashing out at Canada’s Justin Trudeau and ratcheting up trade tensions.

China, Russia Cementing Rising Eastern Bloc as Trump Rattles G-7
Bloomberg News
Scenes of unity in Qingdao contrast with discord in Canada; Rivalries lurk below surface of regional group’s summit
As U.S. President Donald Trump left the Group of Seven nations in turmoil this weekend, China’s Xi Jinping and Russia’s Vladimir Putin were putting on a very different show on the other side of the world.

We’d better get used to Emperor Donaldus Trump;The president’s age-old strategy is to bully China and Europe. It seems to be working
Niall Ferguson – The Times
To most highly educated people I know, Donald Trump is a terrible, horrible, no good, very bad president. But might he have the makings of a rather effective emperor? The death of the republic is not something that I, a soon-to-be-citizen, would welcome. Yet it’s a possibility that needs to be considered, precisely because so many smart people persist in underestimating Trump.

Why Canadian milk infuriates Donald Trump
John Barber – The Guardian
Trump’s latest trade war target is Canada’s protected dairy industry. But Canadians have no intention of abandoning it – because it works
In the midst of what appears to be a full-blown trade war between Canada and the US over steel and aluminum, and with Donald Trump taking his first steps on Canadian soil for the G7 summit, a familiar bugbear reappeared to haunt the negotiations.

Donald Trump, the Lose-Lose Negotiator; Consulting the classic text on “win-win” negotiation to see what a better trade policy might look like.
Justin Fox – Bloomberg
President Donald Trump’s approach to negotiations, on trade in particular, has had me scratching my head a lot lately. In an attempt to understand it and its likely consequences better, I finally sat down this week and read the classic 1980s book on deal-making.

G7 left reeling after Trump’s last-minute reversal; Future in doubt for grouping that has become synonymous with west
Sam Fleming in Washington, Jim Pickard and Chris Giles in London and Michael Peel in Brussels – Ft
With a single tweet from Air Force One, Donald Trump torpedoed weeks of painstaking diplomacy and drove a wedge deeper between the US and the G7 countries that traditionally consider themselves Washington’s closest allies.

Blame Canada: The Investors’ Edition;America’s affable neighbor is the latest ally to run afoul of President Trump’s ire
Nathaniel Taplin – WSJ
It finally happened: U.S. President Donald Trump picked a fight with the nicest people on earth. Mr. Trump’s Twitter tirade against Canadian Prime Minister Justin Trudeau following this weekend’s contentious Group of Seven industrial nations summit helped push the Canadian dollar down nearly half a percent in Asian trading hours on Monday, coming as fraught negotiations over the future of the North American Free Trade Agreement (NAFTA) appear to be at an impasse.

Trump Failed the Americans of Puerto Rico; The death toll is now estimated at 4,645, and the president’s lack of engagement is largely to blame.
Jonathan Bernstein – Bloomberg
The death toll from Hurricane Maria appears to have been 4,645, despite the official count of 64. That’s 4,645 citizens of the U.S. It’s a disgrace.


Custody: Unchartered Waters for Digital Assets
Chris Kentouris – FinOps
Qualified custodian. That’s a term that compliance and operations managers at registered investment fund advisors, not to mention the US Securities and Exchange Commission, are now grappling with, when it comes to the safekeeping of digital assets.

***From the beginning of the month.

CFTC Chairman Giancarlo to Keynote at the Women in Derivatives Forum

The FCA is sending the wrong message on premium listing; The regulator risks undermining Britain’s reputation for good corporate governance
Sarah Gordon – FT
The Financial Conduct Authority is sending the wrong message. At a time when the UK government has publicly committed to improving business behaviour, and is on the verge of launching a new and more demanding code to govern this, the FCA’s decision to introduce a new ” premium” category loosening the standards which sovereign-controlled companies need to meet in order to list is a retrograde step.

SEC Names Sarah ten Siethoff Associate Director in the Division of Investment Management’s Rulemaking Office
The Securities and Exchange Commission today announced that Sarah G. ten Siethoff has been named the Associate Director for the Division of Investment Management’s Rulemaking Office. As Associate Director, Ms. ten Siethoff will develop recommendations for rulemaking and other policy initiatives relating to funds and investment advisers under the federal securities laws. Ms. ten Siethoff has been a member of the Division of Investment Management in a variety of positions since 2008, serving most recently as Deputy Associate Director in the Rulemaking Office.

Trump’s Bank Regulator Flips Obama’s Script; A former banker is now a top U.S. banking regulator, and he’s reversing a number of his predecessor’s biggest initiatives
Ryan Tracy – WSJ
The banking industry has a new partner in Washington: a top federal regulator, Joseph Otting. Sworn in as Comptroller of the Currency in November, Mr. Otting is the first banker in decades to run the obscure but powerful comptroller’s office, or OCC. The office oversees huge banks such as Bank of America Corp. and U.S. Bancorp , two of his former employers. His resume also includes a stint working alongside Steven Mnuchin, now the Treasury Secretary, atop a bank whose foreclosure record has made it a lightning rod.

FCA secures increased confiscation order against Benjamin Wilson
Today, His Honour Judge Grieve QC sitting at the Central Criminal Court increased the value of a confiscation order made against Benjamin Wilson, a convicted fraudster, from £1 to £31,905.33. The increased order must be paid within 28 days or Mr Wilson will face a further 14 months in prison.

Investing and Trading

The Age of Tech Superheroes Must End; Silicon Valley has an accountability crisis, and at its root is the idolatry of its founder-CEOs
Christopher Mims – WSJ
Whether it’s Theranos Chief Executive Elizabeth Holmes or ousted Uber CEO Travis Kalanick, or the heads of currently troubled public companies like Evan Spiegel of Snap and Elon Musk of Tesla, powerful founder-CEOs who were once lauded for flouting convention are facing a new reality: They aren’t superheroes, after all.

Opinion: These 6 stocks help you build an anti-FAANG portfolio that will beat the ‘Amazon effect’
Philip van Doorn – MarketWatch
Retail is dead, and Amazon and other “FAANG” companies are taking over the world
Not so fast, says Brian Milligan, the lead manager of the Ave Maria Growth Fund, which has a five-star ranking, the highest, from Morningstar.

Americans’ Wealth Surpasses $100 Trillion; Household net worth rose by 1% in the first quarter
Harriet Torry – WSJ
Americans’ wealth surpassed the $100 trillion mark for the first time in early 2018, as rising home prices offset the hit to households’ assets from a stock-market swoon in the first quarter.

Hot Commodity in the Shale Boom: Truckers; Pipelines filled to the brim drive up demand for Permian Basin drivers; signing bonuses and six-figure salaries
Rebecca Elliott and Jennifer Smith – WSJ
Santiago Rivera earns around six figures hauling water in America’s hottest oil field. He was at a truck stop in Midland, Texas, last month when a man in a gray polo shirt walked up and offered him more.

£1bn investor: ‘We’ve held this stock since Queen Victoria was on the throne’
James Connington – Telegraph
In the same year that the Bankers Investment Trust first invested in HSBC, the Eiffel Tower opened, Charlie Chaplin was born and Queen Victoria was on the throne.

The $300 Billion FAANG Surge Lives Another Week
Elena Popina and Sarah Ponczek – Bloomberg
Cost of puts versus calls on Nasdaq 100 ETF near 2018 high; Market cap of the Nasdaq Composite is 49% of that of the S&P
The world’s favorite stocks fought through to their seventh rally in nine weeks, though not without landing a few blows on traders.

Pope Francis urges oil and gas groups to tackle climate change; Catholic head warns there is ‘no time to lose’ on transition away from fossil fuels
Leslie Hook and Anjli Raval in London and Ed Crooks in New York – FT
The Pope has warned major oil company heads that there was “no time to lose” to address climate change and urged them to speed up the transition away from fossil fuels.

Insiders Pocket Gains on Buybacks, Vexing Regulator; SEC Commissioner Jackson says executives are taking advantage of loopholes; calls for review to change regulatory rules
Gretchen Morgenson and Tom McGinty – WSJ
Corporate insiders are personally capitalizing on the recent boom in buyback announcements, vexing a top regulatory official.

Hedge Fund With 69% Return Sees More to Come From Oil Recovery
Mikael Holter – Bloomberg
Titan moves bet to Permian bottlenecks, U.S. offshore drillers; Firm run by ex-Fredriksen trader also sets up new credit fund
A hedge fund run by a former associate of billionaire John Fredriksen has gained 69 percent in two years betting on shunned oil-related assets — and it’s not nearly done exploiting the recovery.

Pope Francis Criticizes Continued Search for Fossil Fuels at Meeting with Oil Executives; At Vatican conference, Pope Francis implores investors, oil leaders to help stop climate change, saying the poor ‘suffer most from the ravages of global warming’
Bradley Olson and Francis X. Rocca – WSJ
Pope Francis warned against the “continued search” for fossil fuels Saturday and urged a gathering of oil executives, investors and officials to meet the world’s energy needs while protecting the environment and the poor.

The World’s Biggest Pension Fund Struggles With Sustainability; Making environmental issues a priority has proved elusive to its active managers.
Nathaniel Bullard, Milho Kurosaki – Bloomberg
Japan’s Government Pension Investment Fund has nearly $1.5 trillion in assets and a legion of external asset managers running its portfolio. The GPIF sees itself as a “super-long-term investor” with the goal of a century or more of sustainable investment and outflows. Managing money for that long is a matter of stewardship, not just picking assets — and in the past few years, the GPIF has included environmental, social and governance factors as part of its stewardship responsibilities.

Insiders Pocket Gains on Buybacks, Vexing Regulator; SEC Commissioner Jackson says executives are taking advantage of loopholes; calls for review to change regulatory rules
Gretchen Morgenson and Tom McGinty – WSJ
Corporate insiders are personally capitalizing on the recent boom in buyback announcements, vexing a top regulatory official. Taking advantage of price bumps that often accompany share-repurchase announcements, company executives have been selling significantly more of their stock immediately after the news than they do beforehand, according to an analysis by Robert J. Jackson, Jr. , a commissioner at the Securities and Exchange Commission.

Is It Better to Have a Team or a Single Manager Overseeing Your Fund?; An analysis of the largest funds benchmarked to large-cap, small-cap, and emerging-markets indexes finds solo portfolio managers outperforming.
Cameron Crise – WSJ
What’s the ideal number of portfolio managers for an investment fund? Whether you’re a proponent of a single-manager model or prefer shared responsibility, there’s a saying to support your view: “Two heads are better than one.” “Too many cooks spoil the broth.”

Bond Traders Face $193 Billion Appetizer Before Fed Main Course
Alex Harris – Bloomberg
U.S. auctions range in maturities from 4 weeks to 30 years; Wall Street dealers could get stuck with more of the supply
Bond traders have their work cut out for them before they get to the pivotal event for U.S. financial markets this week — Wednesday’s announcement from the Federal Reserve.

Global Investment in Wind and Solar Energy Is Outshining Fossil Fuels; In 2016, about $297 billion was spent on renewables—compared with $143 billion on new nuclear, coal, gas and fuel-oil power plants
Russell Gold – WSJ
Global spending on renewable energy is outpacing investment in electricity from coal, natural gas and nuclear power plants, driven by falling costs of producing wind and solar power.

New Chicago investment firm attracts $2 billion in assets
Lynne Marek – Crain’s Chicago Business
Two Chicago private-equity pros from rival firms who came together last year to form a new investment firm, Cresset Capital Management, have already attracted $2 billion in client assets and 40 employees.


Top investment bank profits at pre-crisis levels; Heavyweights in good health despite a decade of change in sector
Laura Noonan – FT
The world’s top investment banks made more money in 2017 than in the year before the collapse of Lehman Brothers, highlighting the industry’s resilience from a crisis that threatened to overwhelm it.

eVestment’s Most Searched Hedge Funds In May: AQR, Capital Fund Management Lead
AlphaWeek Staff
Data shop eVestment tracks, amongst many things, the most popular hedge funds which its institutional investor clients and consultants click on each month.

Most Beaufort Securities customers to be spared insolvency costs; Administrators PwC reach deal with creditors and Financial Services Compensation Scheme
Kate Beioley
Most customers of collapsed UK brokerage Beaufort Securities will not face any costs as a result of the firm’s insolvency, after administrators PwC climbed down on fees.

Lloyd Blankfein: Same CEO, Different Goldman Sachs; On his watch, the firm has raised deposits and now relies less on the short-term borrowing that left it dangerously exposed in 2008
Liz Hoffman – WSJ
A decade after the financial crisis, The Wall Street Journal has checked in on dozens of the bankers, government officials, chief executives, hedge-fund managers and others who left a mark on that period to find out what they are doing now. Today, we spotlight Goldman Sachs CEO Lloyd Blankfein and former Citigroup executive and Treasury Secretary Robert Rubin.

HSBC New CEO Flint’s $17 Billion Plan Falls Flat on Investors
Gavin Finch and Stephen Morris – Bloomberg
CEO Flint seeks to increase investment in its key Asia markets; Emerging markets lender also targets 11 percent ROTE by 2020
HSBC Holdings Plc Chief Executive Officer John Flint’s plan to pour as much as $17 billion into expanding its key Asian markets and improving technology failed to inspire investors.

HSBC chief John Flint promises return to ‘growth mode’; Europe’s biggest bank plans $15bn-$17bn investment in ‘growth and technology’
Martin Arnold, Banking Editor – FT
The new chief executive of HSBC has promised to break almost a decade of declining revenues by investing $15bn to $17bn in “growth and technology” as he presented his strategy to investors.

Betting on New S&P 500 Stocks Like Twitter? It’s a Risky Game; Shares of the social media network jumped nearly 6% after joining the index last week, but data suggest much of those gains fade over time
Akane Otani – WSJ
Twitter Inc.’s TWTR 3.80% recent debut on the S&P 500 will test investors’ belief that inclusion in one of the world’s most widely followed stock indexes is a boon to returns.

Acclaimed Fund Manager’s Latest Target: Hidden Costs of Indexing; Rob Arnott says index managers should wait to trade until prices snap back to normal levels after index providers announce which companies will be added or deleted
Asjylyn Loder – WSJ
Rob Arnott thinks fund managers should move more slowly. The founder of the investing firm Research Affiliates says some of the world’s cheapest index funds track their benchmarks too closely, a “self-inflicted wound” that ends up costing investors billions of dollars.


Jack Ma’s Ant Financial Valued Around $150 Billion After Funding Round; Chinese fintech giant said it raised about $14 billion in one of the largest private-capital raises on record
Stella Yifan Xie and Julie Steinberg – WSJ
Jack Ma’s financial-technology giant has solidified its position as one of the world’s most valuable private companies.

Emerging-Markets Rout Boosts Contagion Fears; Retreat in some emerging-market assets, along with political turmoil and a stronger U.S. dollar, signal caution for investors
Ira Iosebashvili, Ben Eisen and Amrith Ramkumar – WSJ
A rout in emerging-market assets has sparked concerns that the turbulence could spread from distant corners of the world to the U.S. and elsewhere.

Sweden Tries to Halt Its March to Total Cashlessness
Amanda Billner , Niklas Magnusson , and Rafaela Lindeberg – Bloomberg
Banks hit back at proposal saying it violates EU law; Banks say plan would significantly raise costs for customers
A key committee of Swedish lawmakers wants to force the country’s biggest banks to handle cash in an effort to halt the nation’s march toward complete cashlessness.


Top Brexit Backer Passed Trump Team Info to Russians
Chas Danner – New York Magazine
Concerns about Russia’s election meddling — in the U.K. — reached new heights on Saturday after leaked emails revealed extensive links between one of the top backers of a pro-Brexit campaign and Russian officials. The Observer and Sunday Times of London obtained the some 40,000 emails sent by millionaire businessman Arron Banks, the chief financial backer of U.K. Independence Party leader Nigel Farage’s Leave.EU campaign, and Andy Wigmore, Leave.EU’s director of communications.

Britain proposes one-year Brexit backstop plan to EU
Elizabeth Piper – Reuters
British Prime Minister Theresa May unveiled a one-year backstop plan for the Irish border after Brexit on Thursday, finding a compromise that may paper over differences in her government but may also struggle to win over the European Union.

UK to apply to stay in European standards system after Brexit; Move follows business warnings that creating UK benchmarks would increase costs
George Parker in London – FT
The UK is to apply to stay in the European standards system for industry products and services after Brexit, following warnings from business that creating British-only benchmarks would be “an isolationist move” that would pile costs on to companies.


Whether you like it or not, office politics is unavoidable; Five steps can help you understand power and politics, and work with them productively, write George Binney, Philip Glanfield and Gerhard Wilke
London School of Economics and Political Science
We meet many people in organisations who have an ingrained aversion to organisational politics. They see politics as divisive, sinister and illegitimate. They say: ‘Without politics, this organisation would function smoothly’. They are wary of the competition for jobs, status and power which often leads to dishonesty and manipulation. They fear that political skill is incompatible with personal authenticity or professional competence. They often use politics as a dirty word to describe the bad practices of others, they say: ‘I try to do an honest job, but I am not sure about him – he plays politics

Goldman Tips Brazil for World Cup After 1 Million Simulations
Fergal O’Brien – Bloomberg
So much for the unpredictable nature of the beautiful game. Goldman Sachs Group Inc. reckons Brazil will win its sixth World Cup, basing its forecast on data mining, machine learning and econometrics.

Tips for office interns that apply to us all; Ignore guff from bosses and focus on sensible ways to improve working life
Pilita Clark – FT
The other day, the bosses of the Jefferies investment bank decided to write a letter to their new crop of summer interns and post it on the firm’s website.

0.00 avg. rating (0% score) - 0 votes

About Author

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