| October 03, 2016 | "Irreverent, but never irrelevant" | | | | John Lothian
Publisher
John Lothian News | |
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Bits & Pieces
By JLN Staff
Our sign up for the London stop in the MarketsWiki Education World of Opportunity European tour is up and running. Go HERE to find the sign-up page. If you can't use our Google form, please email me at johnlothian@johnlothian.com with the names of the attendees, their email addresses and your contact information.
Today also marks the AD era for John Lothian & Co., as in After Doug. We will now find out just how much we will miss him on a daily basis.
Our A Leg To Stand On winner of the Geneva Trading Rocktoberfest tickets was Evan Loftus of Eris Futures. Congratulations Evan. If anyone is still interested in buying tickets for the October 6 event at City Winery in Chicago, you can find them here
Meanwhile, we will find out if there really is such a thing as too big to fail. Angela Merkel and John Cryan, the floor is yours. Check out our Deutsche Bank section below.
We have also included our recurring BREXIT section below, just because it is the big news that won't go away.
It is Boy Scout popcorn sale season time and Robby Lothian is selling popcorn to help him pay for this Scouting adventure in the next year. You have the opportunity to buy popcorn from the tallest Boy Scout in our troop. Robby is now 6'5". He needs help competing for popcorn sales against those cute little Cub Scouts. Believe me, they are cute. If you are interested, contact John Lothian for details.
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Supreme Court to weigh reach of insider trading law
Nate Raymond - Reuters
The U.S. Supreme Court is set to consider this week a closely watched insider trading case that could limit the ability of prosecutors to pursue such charges against hedge fund managers and other traders. The eight justices, who open their 2016-17 term on Monday, will hear arguments on Wednesday in the case of an Illinois man, Bassam Salman, who prosecutors said made nearly $1.2 million trading on inside information about mergers involving clients of Citigroup Inc(C.N), where his brother-in-law worked.
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***** Clarity will be helpful.
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Why the Best Leaders Want Their Superstar Employees to Leave; When a stream of top performers go on to better things, it usually hastens the flow of more top talent into the company
By Sydney Finkelstein - WSJ
Should bosses try to hold on to their star performers?
For most of corporate America, the question might seem like nonsense. Star performers are seen as so valuable that managers should pull out all the stops to keep themÂor else see their companies take a big hit in productivity. Yet some of the best managers not only allow their top performers to leave, but actively encourage it.
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***** This is not a message to anyone.
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Bill Looney, CBOE - The Champions' Mindset
MarketsWikiEducation.com
"The more you apply your inherent skill set to a job, and the more that job requires your inherent skill set, the greater the formula is for success. And, more importantly, the happier you'll be."
Bill Looney is a real Renaissance man - institutional sales trader, client services executive, jazz drummer, amateur pilot and professional golfer. He also knows the stuff of which champions are made.
He tells the story of Dustin Johnson, winner of the 2016 U.S. Open golf tournament, who found himself at the center of a controversy when his ball "may or may not have" moved just as he was addressing a putt - a possible one-stroke penalty. Rather than let it go to his head, Johnson stayed in the moment, focused on the next shot, and ended up winning the tournament by three strokes.
Looney says the champions' mindset involves staying optimistic, focusing on the present, understanding one's talents, and possessing confidence and perseverance. Is that a formula for success, or a Jedi training manual? Either way, if you follow these simple rules, the force will be with you.
Watch the video »
*** This is the fourth of our ten New York 2016 presentations. We recently released Kristin Boggiano of Guggenheim Partners, Bill Harts of the Modern Markets Initiative, Adena Friedman of Nasdaq. and Kenny Polcari of O'Neil Securities We will finish out the New York run just as the team steps onto the plane for the European tour.
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Clayton Christensen moves on from the dissing of disruption; Promoting a new book about innovation, Harvard professor says he learnt from a colleague's critique
by: Andrew Hill
A placard hangs in Clayton Christensen's cluttered office at Harvard Business School with the handwritten message "Anomalies wanted" on both sides  one facing in, the other out, so passers-by can see it.
/goo.gl/rI7ec5
***** A disruptive fellow professor hit the disruptive innovation professor, and it is all for the good.
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Too Many Fat Pigs Are Making Hogs Biggest Commodities Loser
Lydia Mulvany, Jen Skerritt - Bloomberg
Funds cut wagers on hogs rally in four of last five weeks; Slaughter numbers signal 'obscene record supply,' analyst says
Ham, bacon, ribs, pork loins -- if it has to do with pigs, prices are in the doldrums.
/goo.gl/uyJPvL
***** I fear this has the makings of a new reality TV show.
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Wine Prices Rise to Record at South Africa's Cape Guild Auction
Tshepiso Mokhema - Bloomberg
Sales at single-day auction climb 17% compared with 2015; Hotel company Tsogo Sun is biggest buyer for third year
Wine prices climbed to a record at one of South Africa's biggest sales, with hotel group Tsogo Sun Holdings Ltd. being the largest buyer for a third straight year.
/goo.gl/2liR5U
***** Wine up, pigs down.
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New brewery opens every three days in thirsty Britain; Some 134 breweries opened last year as entrepreneurs capitalise on the thirst for craft beers
by: Scheherazade Daneshkhu, Consumer Industries Editor
A new brewery opened every three days in the UK last year as entrepreneurs sought to capitalise on the thirst for craft beers with outlandish names such as Northern Monk Lust and Mad Hatter Wee Buns.
/goo.gl/0BXwAE
***** Beer does go better with a pig roast than wine.
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Futures Insider Trading; Artificial Prices; Theft by Convention; Whistleblowing
Gary DeWaal - Bridging the Week
Last week, the Commodity Futures Trading brought and resolved its second enforcement action based on the securities industry's concept of insider trading, while a federal court ruled in response to a motion for partial summary judgment that the CFTC must show that a price was intended to be artificial to ultimately prevail in a lawsuit alleging manipulation and attempted manipulation. In addition, the Securities and Exchange Commission agreed to settle an enforcement action with a publicly-traded company for terminating a whistleblower where an internal investigation found the whistleblower's complaints were unfounded. As a result, the following matters are covered in this week's edition of Bridging the Week:
jlne.ws/2dM1MBm
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Friday's Top Three
When dealing with dictators, salesmanship matters. Such was the case for Youssef Kabbaj, the Goldman Sachs salesman in Libya in Bloomberg's most read story on Friday, Goldman's Libya Salesman Was a Little Too Good. The second most read story was the tragic deaths of Robin Korkki, a commodities trader in Chicago and her sister Annie Korkki, who worked for JPMorgan Chase in Denver while on vacation in Seychelles. The Chicago Tribune covered the story. The third most read story was Information Week's piece Low-Code Development Pays Off For Derivatives Marketplace
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| Lead Stories | Fifteen Years After Decimalization, 'Tick Size' Widening for Some Small-Company Stocks; Beginning Monday, select companies will trade in five-cent increments instead of one-cent; pilot program to run for two years
Alexander Osipovich - WSJ
Shares in some small companies will start trading in five- rather than one-cent increments Monday, in the first adjustment to "tick" sizes since the decimalization of the U.S. stock market 15 years ago.
/goo.gl/bQyv31
CFTC's 'annual ritual' of September crackdowns; US regulator's enforcement moves come at end of federal fiscal year
Gregory Meyer in New York - FT
Drivers are advised to slow down at the end of the month to avoid police meeting speeding ticket quotas. For wrongdoers in derivatives markets, crackdowns come at the end of September. Last week the US Commodity Futures Trading Commission announced 11 enforcement actions against market participants as diverse as Wells Fargo bank and a former fuel trader for Delta Air Lines. The tally was 10 times the weekly average.
/goo.gl/Fn8K9q
Shanghai Exchange poised to take Pakistan bourse stake; Move would mark Chinese exchange's first overseas investment and bolster financial ties China-Pakistan ties
Lucy Hornby in Beijing and Farhan Bokhari in Islamabad - FT
The Shanghai Stock Exchange is in pole position to buy a stake in Pakistan's bourse, in a move that would mark the Chinese exchange's first overseas investment and bolster financial ties with one of China's closest partners.
/goo.gl/I97ib1
It's not just Deutsche. European banking is utterly broken
Jeremy Warner - Telegraph
A little while back I somewhat unwisely penned a column declaring the financial crisis essentially over. All I meant by this was that with the return of full employment and rising living standards, most of the economic wounds of the crisis had healed, at least in the US and the UK.
/goo.gl/xW5lhD
What's behind the radical pilot to boost small US listed stocks; Plan to raise liquidity affects stocks under a $3bn market cap
Philip Stafford in London and Nicole Bullock in New York - FT
>From Monday US equity markets will become the test bed for a radical pilot scheme aimed at boosting liquidity in thousands of its smallest listed stocks. "This is not just a tiny corner of the market. While individually these stocks are illiquid, in sum they add up to about 11 per cent of all US equity trading. That's more than 600m shares trading per day," says Philip Pearson, director of algorithms at ITG, the broker-dealer.
/goo.gl/NBeJfl
Global Bond Markets Shackled to Japan by Kuroda's 0% Quest
Wes Goodman, Kevin Buckland, Shigeki Nozawa - Bloomberg
BOJ spurs decline in bond volatility, surge in correlations; Mizuho Asset says yields across bond markets may all converge
Haruhiko Kuroda might have set his sights on Japan, but his latest move is turning out to have far-reaching consequences for bond markets all over the world.
Haruhiko Kuroda
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Fewer people living below poverty line, inequality lingers, says World Bank
Sebastien Malo - Reuters
The number of people living in extreme poverty has declined by more than 100 million across the world despite a sluggish global economy, the World Bank said on Sunday. The World Bank said 767 million people were living on less than $1.90 a day in 2013, its latest comprehensive data, down from 881 million people the previous year, with the strongest income rises in Asia.
/goo.gl/ycnE4q
Henderson's Shares Rally Most in Seven Years on Janus Deal
John Gittelsohn, Kathleen Chu, Sarah Jones - Bloomberg
Dai-ichi to boost stake to own 15% of combined company; Joint business to have about $6 billion market value
Henderson Group Plc agreed to buy Janus Capital Group Inc., creating a $320 billion money manager as both companies seek to boost profit and assets in the face of rising competition from passive managers. Henderson's shares surged the most in more than seven years.
/goo.gl/jud21b
Sustainable Finance and the Rise of Investment Conscience
Chris Killian and David Strongin - SIFMA
At SIFMA's 2016 Annual Meeting, The Capital Markets Conference, sustainable finance was high on the agenda. SIFMA brought together representatives from across the spectrum of sustainable finance, including government, large capital market firms, not-for-profits and investors. Congressmen John Delaney (D-MD) and Tom MacArthur (R-NJ) participated in the panel in their capacity as co-chairs of the Congressional Social Investment Task Force.
/goo.gl/6Tq3is
Deutsche Bank's Appetite for Risk Throws Off Its Balance
Landon Thomas - NY Times
The global banking giants  think of JPMorgan Chase or HSBC  make a nice return by capturing their share of the trillions of dollars that course through financial markets each day. But few are as reliant on this business  be it swapping currencies, selling bonds or structuring derivatives  as Deutsche Bank, the giant lender that has made its name not as a home for German savers but as a place for hedge funds and other risk-loving investors to put on some of their boldest financial bets.
/goo.gl/UatMrn
Texas Businessman Agrees to Pay $198.1 Million in Fraud Case
Reuters
A Texas businessman, Sam Wyly, has agreed to pay $198.1 million to resolve claims by federal securities regulators that he engaged in a long-running securities fraud to hide trades in companies he controlled using offshore trusts, according to a court filing.
/goo.gl/VgFQwC
UK watchdog's crackdown on individuals begins to bear fruit; Financial Conduct Authority banned 27 people after regulatory infractions last year
Caroline Binham, Financial Regulation Correspondent - FT
A promised regulatory crackdown on individual behaviour rather than headline-grabbing fines on companies is beginning to bear fruit, with the number of people banned from holding jobs in the City of London rising for the first time in four years.
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| Deutsche Bank News | | A roundup of stories surrounding the troubles at Deutsche Bank. | Deutsche Bank races against time to reach U.S. settlement
Georgina Prodhan, Kathrin Jones and Lawrence Delevingne - Reuters
Deutsche Bank is throwing its energies into reaching a settlement before next month's presidential election with U.S. authorities demanding a fine of up to $14 billion for mis-selling mortgage-backed securities. The threat of such a large fine has pushed Deutsche shares to record lows, and a cut-price settlement is urgently needed to reverse the trend and help to restore confidence in Germany's largest lender.
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Deutsche Bank, U.S. DOJ Continue to Discuss Mortgage-Securities Settlement; No Deal Between Deutsche Bank, DOJ Presented to Senior Decision-Makers
Jenny Strasburg and Aruna Viswanatha - WSJ
Deutsche Bank AG's talks with the U.S. Justice Department to settle a high-profile set of mortgage-securities cases are continuing, with no deal yet presented to senior decision makers for approval on either side, according to people familiar with the matter.
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Why Fear of Deutsche Bank Bailout Is Wide of the Mark
Paul J. Davies - WSJ
Deutsche Bank stock has endured such stomach-lurching drops this week that some have questioned its survival, or talked of the need for a government bailout. Such talk is unrealistic, even wild. Here are the numbers that will show you why. Deutsche's balance sheet has changed a lot since 2008 when it was one of the most highly leveraged banks in the world. The simplest way to see this is simply to look at assets and equity.
/goo.gl/BY2ad8
German minister accuses Deutsche Bank of making speculation its business
Gernot Heller - Reuters
German Economy Minister Sigmar Gabriel accused Deutsche Bank (DBKGn.DE) on Sunday of blaming speculators for last week's plunge in its share price when the bank had itself made speculation its business.
/goo.gl/DMlpvh
A Deutsche Bank settlement overshadows U.S. equities
Rodrigo Campos - Reuters
Deutsche Bank will likely cast a pall over equity markets next week as the largest German lender navigates a possible multi-billion dollar settlement with the U.S. Department of Justice over the sale of mortgage-backed bonds. Deutsche shares traded in the United States (DB.N) hit a record low on Thursday, falling as much as 24 percent since the DOJ asked the bank to pay $14 billion to settle charges related to its sale of toxic mortgage bonds before the financial crisis.
/goo.gl/YyOj1Z
How US regulators may be creating panic around Deutsche Bank
Evelyn Chang - CNBC
Deutsche Bank finds itself in the center of a panic, and some analysts are pointing fingers at U.S. regulators. Germany's biggest bank fell under fresh scrutiny beginning on Sept. 16 when it surfaced that the U.S. Department of Justice was demanding it pay a $14 billion fine for its mortgage lending activities during the housing bubble.
/goo.gl/SeZbKU
A Russian Tragedy: How Deutsche Bank's Wiz Kid Fell to Earth
Liam Vaughan, Jake Rudnitsky, and Ambereen Choudhury - Bloomberg
Mastermind or scapegoat, Tim Wiswell was at the heart of the bank's $10 billion mirror-trade scandal.
Just off the Connecticut shoreline where he grew up, Tim Wiswell leaned forward in the cockpit of his sleek, all-white 50-foot yacht. It was Aug. 9, 2015, and, dressed in shorts, a polo shirt, and mirrored shades, his hair tousled by the breeze, the 36-year-old was a picture of health and happiness. Natalia, the Russian artist he'd married five years earlier, lay by his side. Their two small children played nearby.
Will the German government let the lights go out on Deutsche Bank?
Tim Wallace - The Telegraph
The last mass extinction came 65m years ago, when the dinosaurs were wiped off the face of the earth. Financiers will not thank him for the comparison, but German central banker Andreas Dombret has compared the comet-smash and subsequent death of the giant reptiles to the current state of the banking industry.
/goo.gl/sktpdQ
Germany's Merkel cannot afford to bail out Deutsche Bank: media
Georgina Prodhan - Reuters
German Chancellor Angela Merkel cannot afford to bail out Deutsche Bank (DBKGn.DE) given the hard line Berlin has taken against state aid in other European nations and the risk of a political backlash at home, German media wrote on Saturday.
/goo.gl/lbxond
Ex-Deutsche Bank Executives Among 13 Charged in Paschi Probe
Sonia Sirletti and Sergio Di Pasquale - Bloomberg
Six current and former managers of Deutsche Bank AG -- including ex-asset and wealth management head Michele Faissola -- along with former executives at Nomura Holdings Inc. and Banca Monte dei Paschi di Siena SpA were charged in Milan for colluding to falsify the accounts of Italy's third-biggest bank and manipulate the market.
/goo.gl/DEkavl
Deutsche Bank's Woes Put $2 Trillion of Bonds Beyond ECB's Reach
Lukanyo Mnyanda - Bloomberg
The troubles of Deutsche Bank AG are making European Central Bank President Mario Draghi's job more complicated. The surge this week in relatively safe sovereign securities left about a third of the Bloomberg Eurozone Sovereign Bond Index ineligible for purchase under the ECB's quantitative-easing program. The gains mean $2.2 trillion of debt in the index now yields less than the institution's deposit rate -- currently minus 0.4 percent -- and is therefore off-limits.
/goo.gl/z3p3si
A Russian Tragedy: How Deutsche Bank's Wiz Kid Fell to Earth; Mastermind or scapegoat, Tim Wiswell was at the heart of the bank's $10 billion mirror-trade scandal.
By Liam Vaughan, Jake Rudnitsky, and Ambereen Choudhury - Bloomberg
Just off the Connecticut shoreline where he grew up, Tim Wiswell leaned forward in the cockpit of his sleek, all-white 50-foot yacht. It was Aug. 9, 2015, and, dressed in shorts, a polo shirt, and mirrored shades, his hair tousled by the breeze, the 36-year-old was a picture of health and happiness. Natalia, the Russian artist he'd married five years earlier, lay by his side. Their two small children played nearby.
/goo.gl/DGGa2G
Germany's deputy chancellor attacks Deutsche Bank chief; Sigmar Gabriel rounds on John Cryan for blaming 'speculators' in memo to staff
by: Guy Chazan in Berlin - FT
Germany's deputy chancellor has launched a blistering attack on John Cryan, Deutsche Bank chief executive, as concerns continue to rise among the country's political and corporate elite over the market storm threatening to engulf the country's biggest lender.
/goo.gl/HyEJJn
Deutsche Bank's derivatives exposure threatens market, finds JPM analyst
By Joe Parsons, The Trade
Deutsche Bank's huge derivatives book could cause a contagion effect and threaten markets "if concerns continue", according to an analyst at JP Morgan.
/goo.gl/BZmtkR
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| Brexit | | Financials stories regarding the recent decision of the United Kingdom to leave the European Union | 'Brexit' Talks Will Start by End of March, Theresa May Says
Stephen Castle - NY Times
Outlining a timetable for Britain to leave the European Union in the spring of 2019, Prime Minister Theresa May on Sunday put immigration at the center of her strategy for withdrawal, suggesting that Britain could be headed for a "hard Brexit," or clean break, from the bloc.
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Finally we know what Brexit actually means - Theresa May intends to take us out of the single market
The Independent
Theresa May was received with muted rapture in the hall in Birmingham today, by a party that cannot quite believe that, since its last annual conference, the country has voted to leave the EU and they have a new leader and Prime Minister. The lack of triumphalism felt strange, but it reflects something that Patrick McLoughlin, the Conservative chair, referred to in his opening speech. He referred obliquely to families divided by the referendum debate. Two thirds of Tory members voted to leave the EU, but that means that one third supported Remain.
/goo.gl/GidgbP
Brexit Turns U.K.'s Finance Chief Into the Quiet Man Next Door
Svenja O'Donnell - Bloomberg
Hammond gets overshadowed by ministers preparing for EU talks; Treasury no longer calling the shots, says former adviser
To show the traditional importance of the Chancellor of the Exchequer in British government, the keeper of the nation's finances lives next door to the prime minister.
/goo.gl/bM8Fsn
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| Exchanges, OTC & Clearing | | Top news from exchanges, clearing, settlement and trade execution facilities | A behind-the-scenes look at what actually goes on during an IPO on the New York Stock Exchange
Business Insider
There are few things more anticipated in the stock market than an initial public offering, or IPO. IPOs occur when companies offer their stock, or shares of the firm, to the public for the first time. There are a few exchanges in the US on which stocks are traded, and thus on which IPOs can take place. The New York Stock Exchange is the largest and oldest of these exchanges, starting in 1792, and it sits in its iconic home on Wall Street.
/goo.gl/w4GLrS
Nasdaq's "fall" from ETF dominance
Joe Rennison - Financial Times
Jeffrey McCarthy, head of exchange traded product listings at Nasdaq, was a tad defensive when we asked him about Nasdaq's position as an ETF exchange. Not because Nasdaq ranks behind Bats and Nyse in both shares traded and notional volume, but because Nasdaq had claimed on its website that it was indeed the biggest for ETFs. "We don't make that claim for ETFs," McCarthy said at a conference on Thursday, on a panel with representatives from all three exchanges. "We make the claim that Nasdaq is the single largest liquidity pool in the equity market." Except, well, here's how Nasdaq was advertising its dominance as an ETF exchange as McCarthy was talking: Right there in the middle: "The World's Largest for ETFs" and "Based on trading volume..."
/goo.gl/mm81O9
Shanghai Stock Exchange bids for stake in Pakistan bourse
Nikkei Asian Review
The Shanghai Stock Exchange has submitted a letter of intent to buy a stake in the Pakistan Stock Exchange, The Nikkei Asian Review has learned. The Chinese market operator intends to buy a stake of up to 40% in the PSX. If it goes through, the acquisition would be the first by a Chinese stock exchange of a foreign bourse.
/goo.gl/T4XLhr
Revitalized Philly Stock Exchange is relocating again
Philly.com
The Philadelphia Stock Exchange, an occasionally mobile institution that has migrated among the Old Customs House, the First Bank of the United States, the Sofitel tower, and other landmarks since its 1791 founding at what is now City Tavern, plans to rise from beneath Market Street. The next move - from its 34-year home at 1900 Market St. to three floors of the 49-story FMC Tower at Cira South at 2929 Walnut - fits the market's growing role in the business of trading stock-options contracts, which investors use to bet on whether a stock will rise or fall.
/goo.gl/LS3IVW
New trading participant at SIX Swiss Exchange
SIX
With Liquid Capital Management LLP a further trading participant enjoys the advantages of the most cutting-edge trading technology.\ SIX Swiss Exchange is pleased to announce the arrival of Liquid Capital Management LLP as its second new trading participant in 2016. The London-based company is part of the Liquid Capital Group which operates globally with further offices in Sydney, Hong Kong and Chengdu and trades on over 25 exchanges.
/goo.gl/l7oLMt
Euronext weighs bid for LSE Paris business LCH SA
Billy Bambrough - City AM
Euronext - the owner of the main Paris, Dutch, Portuguese and Belgian stock exchanges - is mulling a bid for the London Stock Exchange's (LSE) Paris-based clearing house.
/goo.gl/BL1je6
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| Politics | | An overview of politics during an election year as it relates to the financial markets | Donald Trump's Tax Numbers Sharpen Focus on Treatment of Losses; Weekend revelations put the Republican presidential nominee on the defensive
Richard Rubin - WSJ
The weekend revelation of some of Donald Trump's tax records put the New York real-estate developer on the defensive by showing the extent of his 1990s financial troubles and suggesting those setbacks could have eliminated his federal income-tax bill for years afterward.
/goo.gl/zQTRFz
How Donald Trump Turned the Tax Code Into a Giant Tax Shelter
James B. Stewart - NY Times
Now we know: Donald J. Trump racked up losses so huge in the early 1990s that he wouldn't have had to pay federal or New York State income tax on nearly a billion dollars in income.
/goo.gl/ZP5o0m
Donald Trump Tax Records Show He Could Have Avoided Taxes for Nearly Two Decades, The Times Found
DAVID BARSTOW, SUSANNE CRAIG, RUSS BUETTNER and MEGAN TWOHEY - NY Times
Donald J. Trump declared a $916 million loss on his 1995 income tax returns, a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years, records obtained by The New York Times show.
/goo.gl/a6v4x7
The Time I Found Donald Trump's Tax Records in My Mailbox
NY Times
In this article, Susanne Craig, a New York Times Metro reporter who covers government and politics, reveals one of the lesser-known benefits of "snail mail." My colleagues make fun of my old-fashioned devotion to my mailbox. It's about 30 feet from my desk  among all the other third-floor employees' mailboxes  and I check it constantly, always hoping a tipster will have sent me some revealing letter or secret document. In Metro, we get a lot of junk mail and are regularly flooded with correspondence from prisoners in New York's penitentiaries. But Friday, Sept. 23, was different.
/goo.gl/YA2Tvq
Brexit Mastermind Tells Trump to Avoid Catfight With Clinton
Elizabeth Dexheimer - Bloomberg
Nigel Farage, who helped lead the campaign for the U.K. to leave the European Union, has some advice for Donald Trump ahead of the next U.S. presidential debate against Democrat Hillary Clinton. "Don't let her get under your skin," Farage, the former leader of the UK Independence Party (UKIP), said in an interview on CNN's "Fareed Zakaria GPS" that's scheduled to air Sunday. "Whatever abuse she throws at you, ignore her. Don't defend yourself. There's no point. There isn't time."
Betting on the U.S. election via the 'Trump ETF'
Trevor Hunnicutt - Reuters
An exchange-traded fund focused on Mexico has become a weather vane for Republican Donald Trump's chances winning the U.S. presidential election in November, investors said. Mexico has been a prime target for Trump, who has accused the country of taking away jobs from Americans, focusing particular ire on a landmark 1990s trade agreement with the United States' southern neighbor and Canada.
/goo.gl/56eYu8
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| Investing & Trading | | Today's top stories from fixed income, currencies and commodities (FICC) | European Commission to investigate fund fees and performance; Could lead to new regulation
InvestmentWeek
The Financial Times reports the European Commission is to recommend EU regulators investigate the performance and fees of retail investment products, to ensure better service for consumers.
/goo.gl/ZCCj8S
Negative-Yielding Bonds Jump to Almost $12 Trillion After Ebbing
Phil Kuntz - Bloomberg
The unprecedented worldwide surge in the market for bonds that are certain to lose money if held to maturity regained strength last month. The total face value of negative-yielding corporate and sovereign debt in the Bloomberg Barclays Global Aggregate Index of investment-grade bonds jumped to $11.6 trillion as of Sept. 30, up 6.1 percent from a month earlier. That sum had fallen for two months in a row from June's $11.9 trillion peak.
/goo.gl/gG6zTt
Stock Investors Rediscover Taste for Risk
Aaron Kuriloff - WSJ
Investors shifted toward riskier stocks in the third quarter, helping push major U.S. indexes to record highs and lifting optimism that stocks' seven-year bull run will continue despite sputtering corporate earnings. After a climb led by shares of utilities and telecommunications companies, which tend to do well during times of anxiety because they are seen as relatively stable, technology stocks surged: They led the S&P 500 with a 12% gain over the past three months and propelled the tech-heavy Nasdaq Composite Index to fresh highs with a 9.7% quarterly gain. The S&P 500 rose 3.3% and the Dow Jones Industrial Average climbed 2.1%.
/goo.gl/1EZQPm
Rieger Report: Sector Driven Corporate Bond Returns
S&P Indexology
Sector selection seems to be a major component of bond market returns in 2016. On a total return basis the bonds of companies in the S&P 500 Index have been outperforming the stocks of those companies in 2016. A closer look reveals that as the yield starved market pushed yields down the higher yielding sectors of the bond markets have been what is driving the performance of the bond market.
/goo.gl/7GpjOw
Banks Hold Europe Stock Traders Hostage in Costly Reminder
Sofia Horta E Costa - Bloomberg
Lenders set for worst year since height of debt crisis; Lending to companies still low, hurting region's growth
European bank stocks: never smaller, rarely more menacing.
Stung by fines, weakened by negative interest rates and parrying the threat of another recession, financial firms have seen their value shrink by $280 billion in 2016. They represent a measly 11 percent of the Stoxx Europe 600 Index, near the lowest on record and down from a 23 percent weighting a decade ago.
/goo.gl/NsSkD5
The Rise and Fall of New Funds; Investors routinely pour cash into recently launched funds. Is that a mistake?
Lee Davidson, Madison Sargis, and Tim Strauts - Morningstar
It is easy to dismiss new funds as an immature, unproven, and unimportant segment of the asset-management industry. But the truth of the matter is that the asset-management industry is dominated by new funds. Globally, we find that new funds account for the preponderance of new asset flows. In 2015, global fund flows reached approximately $516.4 billion across the three asset classes in our studyÂequity, fixed income, and allocation. Of the total, new funds with less than 12 months of track record accounted for $379 billion, or 73% of all flows.
/goo.gl/7UPhAU
An imperfect solution: Derivatives create new challenges for buy side
Risk.net
The Buy-side Derivatives 2016 survey, conducted recently by Asia Risk and sponsored by Calypso Technology, reveals derivatives to be powerful but unwieldy management tools. Used to safeguard a firm's predictable sources of return, they also pose the greatest operational and risk management challenges to its portfolio. The survey also asks the buy side's opinion of blockchain, and the market disruption it threatens.
/goo.gl/NPeX8m
Death of the Stock Split: It's Value Not Price That Matters?
By Jason Zweig, WSJ
Stock splits are going extinct.
So far in 2016, only five companies in the S&P 500 stock index  and only 63 among more than 10,100 U.S. companies tracked by S&P Dow Jones Indices  have split their shares. This year is on track to be the third-lowest for stock splits in modern history, behind only 2009 and 2010, when companies were too traumatized by the financial crisis to dare lowering their share prices.
/goo.gl/MsMDBn
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| Banks, Brokers & Managed Funds | | The latest from banks, brokers, hedge funds and managed futures | Bank of England confirms will hold broader bank stress test in 2017
Reuters
The Bank of England said on Monday it would hold a broader stress test of British banks' resilience alongside its regular annual check-up of their financial health.
/goo.gl/87cuOF
BlackRock tells Financial Stability Board it backs fund stress tests
Reuters
BlackRock (BLK.N), the world's biggest asset manager, has told the Financial Stability Board it supports plans to stress test individual mutual funds to make sure they function properly during extreme market environments.
/goo.gl/6D2hGu
Wells Fargo problems far from over as investigations and lawsuits expand
Jana Kasperkevic - The Guardian
Alex Polonsky was watching Senator Elizabeth Warren of Massachusetts lay into Wells Fargo's chief executive, John Stumpf, on 20 September when he finally had enough. He picked up the phone and called Jonathan Delshad, who would soon become his lawyer. Polonsky used to work for Wells Fargo, but according to his lawsuit, he was demoted and later terminated for not meeting his sales quotas.
/goo.gl/rVn1KB
Europe's Perfect Dollar Storm
Lorcan Roche Kelly - Bloomberg
European lenders' reliance on the European Central Bank for dollar liquidity spiked higher this week, yet there has been no commensurate rise in demand for euro liquidity. That suggests the woes of euro-area banks are, at best, only partly to blame for the surge, and that there might be other catalysts for the dollar-demand spike. This week's ECB dollar-liquidity operations cover the end-of-quarter period for banks, and those operations are regularly associated with a surge in demand.
/goo.gl/y7NGVM
BOJ Deploys U.S. World War II Tactics That Failed to Spur Prices
Rich Miller - Bloomberg
In deciding to target bond yields, Japan is deploying a monetary strategy to combat deflation used by its former enemy in World War II. The trouble is that America's experience back then suggests that the tactics probably won't work on their own.
/goo.gl/M2bKrv
Yellen says Fed purchases of stocks, corporate bonds could help in a downturn
Reuters
The Federal Reserve might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds, Fed Chair Janet Yellen said on Thursday. Speaking via video conference with bankers in Kansas City, Yellen said the issue was not a pressing one right now and pointed out the U.S. central bank is currently barred by law from buying corporate assets.
/goo.gl/5KCxEv
'Flash Boy' firm's hedge fund traders share £72m payout
Marion Dakers - The Telegraph
British staff at the hedge fund Citadel shared almost £72m between them last year after the US firm's trading strategies produced double-digit returns. Citadel, which manages $25bn in unusual investments and high-speed trading tactics, saw revenues rise by a fifth to £194m in its London subsidiary last year, delivering a similar rise in pre-tax profits to £102m.
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| Fintech | | A roundup of today's market tech news and a look at tomorrow's disruptors | Big banks make insufficient use of fintech, says research; Start-ups for capital markets attracted just 4% of the $96bn invested in fintech
Laura Noonan - FT
Investment banks are making only paltry investments in start-ups focused on innovative capital markets technology in spite of the opportunity to use such "fintech" to dramatically lower their costs.
/goo.gl/tYAqlr
Intercontinental Exchange Mulls Sale of Interactive Data Managed Solutions Biz
Max Bowie - Waterstechnology
Having acquired Interactive Data last year, ICE plans to sell off the part of the business that it has no use for.
/goo.gl/WM19Ex
Rise of the machines: AI begins to tackle credit risk; Self-taught technology could push humans aside from some - or all - of the underwriting process
Michael Hegarty - Risk.net
Artificial intelligence has been a trope of science fiction for decades. From the unsettling and double-crossing HAL in the film 2001: A Space Odyssey to the oppressive robots enslaving humanity in The Matrix and The Terminator, the concept of sentient machines outsmarting and overthrowing their creators has long permeated popular culture. If these movies are anything to go by, credit risk managers should be worried. Machine learning, a subset of AI that allows computers to answer simple questions...
/goo.gl/890MLf
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| Regulation & Enforcement | | For more regulatory, visit MarketsReformWiki, our website focused on current market reform efforts. | SR-FINRA-2016-038
FINRA
Proposed Rule Change to Amend FINRA Rule 6191 to Modify the Quoting and Trading Requirements Relating to the Block Size Exception and the Use of Intermarket Sweep Orders and Trade-at Intermarket Sweep Orders
/goo.gl/UXEpJB
ESMA CONSULTS ON CONSOLIDATED TAPE FOR NON-EQUITY PRODUCTS
ESMA
The European Securities and Markets Authority (ESMA) has issued today a consultation paper on its draft regulatory technical standards (RTS) regarding the creation of a consolidated tape for non-equity instruments which is required under the Markets in Financial Instruments Directive (MiFID II). The new MiFID II framework, which covers equity-like and non-equity instruments traded on trading venues, introduces provisions for establishing a central source of post-trade prices or consolidated tape.
/goo.gl/8ay941
ESMA ISSUES Q&AS ON THE IMPLEMENTATION OF THE DOUBLE VOLUME CAP UNDER MIFID II
The European Securities and Markets Authority (ESMA) has issued today a Question and Answers (Q&A) document regarding the implementation of the double volume cap under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR). MiFID II introduces a so-called "double" volume cap mechanism which limits the use of reference price waivers and negotiated price waivers under the new transparency regime of MIFID II.
/goo.gl/ugLdvL
Policing the Banks Is an Inside Job
Jordan Thomas - NY Times
As we now well know, Wells Fargo not only opened millions of unauthorized client accounts, but the bank also fostered a corporate culture so toxic that an astounding 5,300 employees have been fired for their involvement in the companywide multiyear scheme. What should bother us more is that our banking regulators appear to have been in the dark the whole time.
/goo.gl/2Q9lVa
Yahoo hack may become test case for SEC data breach disclosure rules
Dustin Volz - Reuters
Yahoo's disclosure that hackers stole user data from at least 500 million accounts in 2014 has highlighted shortcomings in U.S. rules on when cyber attacks must be revealed and their enforcement. Democratic Senator Mark Warner this week asked the U.S. Securities and Exchange Commission to investigate whether Yahoo and its senior executives properly disclosed the attack, which Yahoo blamed on Sept. 22 on a "state-sponsored actor."
/goo.gl/hazrwf
Ex-Morgan Stanley broker gets three years prison in insider trading ring
By Jonathan Stempel - Reuters
A former Morgan Stanley stockbroker who participated in a $5.6 million insider trading ring involving stock tips passed on napkins and Post-it notes in New York's Grand Central Terminal was sentenced to three years in prison on Friday, federal prosecutors said.
/goo.gl/DYbKML
CFTC Charges California Residents Joseph Dufresne, Megan Renkow, and Their Company, United Business Servicing, Inc., Doing Business as Schooloftrade.Com, with Fraudulently Marketing Commodity Futures Trading Strategies and Systems
CFTC
The U.S. Commodity Futures Trading Commission (CFTC) filed a civil anti-fraud enforcement action in the U.S. District Court for the Central District of California charging Defendants Joseph Dufresne (a/k/a Joseph James) and Megan Renkow (a/k/a Megan James), both of Palos Verdes Estates, California, and their company, United Business Servicing, Inc. (UBS), doing business as SchoolofTrade.com (SoT), with fraudulently marketing commodity futures trading strategies and systems.
/goo.gl/ZMnZVM
CFTC Charges New Jersey Residents Alcibiades Cifuentes and Jennifer Wee Cifuentes, and Cifuentes Fund Management, LLC, with Fraud and Misappropriation
CFTC
In a related criminal action, Alcibiades Cifuentes and Jennifer Wee Cifuentes have been charged with mail and commodities fraud
The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the District of New Jersey, charging Defendants Alcibiades Cifuentes (Cifuentes), Jennifer Wee Cifuentes (Wee), both of West New York, New Jersey, and Cifuentes Fund Management, LLC, with off-exchange, leveraged or margined retail foreign currency (forex) fraud, commodity pool fraud, and failing to register with the CFTC.
/goo.gl/hw3eCi
Aaron W. Lipson Named as Associate Regional Director for Enforcement in the SEC's Atlanta Regional Office
SEC
The Securities and Exchange Commission today announced that Aaron W. Lipson has been named the Associate Regional Director for enforcement in the Atlanta office.
/goo.gl/DiXFlL
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| Regions | | Stories of local interest from the Americas, EMEA and Asia-Pacific regions | Why the Yuan Still Has Long Way to Go to Supplant U.S. Dollar
Carolyn Cui, WSJ
China's yuan will officially join the International Monetary Fund's elite basket of reserve currencies on Oct. 1, a designation that the Chinese authorities had fought hard to win.
But don't expect the Chinese currency to overtake the U.S. dollar any time soon as the dominant currency when it comes to reserve management or portfolio investment.
/goo.gl/Pufmfs
Index IDEA: FTSE China indexes highlight diverse points of access to Chinese equities
FTSE Russell Blog
As the world's second largest economy, China is an important market for global investors. Yet, at the same time, China is an emerging market and reflects an evolving market structure which can mean different things to different investors. In particular, the diversity of access points to the China equity market available to global investors underscores the complex nature of China's equity market.
/goo.gl/vnGLI3
At Carnegie Deli in Manhattan, Just 3 Months of Pastramis to Go
Alan Feuer - NY Times
Live in New York long enough and you will lose somewhere you love. Good things die here. It's what keeps the place alive. But every now and then a big one goes, as it did on Friday morning, when the owner of the Carnegie Deli suddenly announced that the Manhattan sandwich place would be shutting down at the end of the year.
/goo.gl/JnkkQj
Mega Financial scandal claims first Taiwan administration victim as top regulator quits
Reuters
Taiwan's top financial regulator resigned on Monday as a scandal over state-run institution Mega Financial's (2886.TW) New York bank branch breaching anti-money laundering regulations claimed its first victim among officials on the island.
/goo.gl/eDyMDF
Libyan wealth fund hampered by power struggles, sanctions; Fund has $67 bln in assets, involved in major litigation; "Evicted" Tripoli chairman launches legal challenge; Frozen funds vital to rebuild country after years of war
By Aidan Lewis - Reuters
A protracted power struggle over Libya's $67 billion sovereign wealth fund risks becoming even more complicated as rival claimants for its chairmanship challenge a bid for control by a U.N.-backed government in Tripoli.
/goo.gl/yxptLP
Middle East: Iran's markets come in from the cold
Euromoney
The country's financial system is still not easy to access; money has trickled rather than flooded into its stock exchange since January's deal with the US to lift sanctions. Nevertheless, as the country emerges from years of isolation, important changes are taking place that could herald a new era for Iran's capital markets.
/goo.gl/LbWJ9F
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| Miscellaneous | | Stories that don't quite fit under the other sections | Congress's Retreat on 9/11 Saudi Bill Shows Fear of Backlash
Steven T. Dennis, Jim Rowley and Billy House - Bloomberg
To Republicans in the U.S. Congress, a bill letting Sept. 11 victims' families sue the Saudi government was just the sort of legal remedy -- and feel-good campaign gesture -- to show they're tough on terrorism. So they rushed the law through over the objections of the White House, with one top Republican posting a photo of himself signing the bill on Facebook. Then they hurried to override the president's veto -- with the help of all but one Senate Democrat.
/goo.gl/BBy7R7
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