Random Market News, 12 September 2017
"Steven Mnuchin: Hedge Funds Will Lose Tax Benefits.
Hedge funds won’t receive the benefit of a carried interest loophole under the tax reform that President Donald Trump is pushing to get done by the end of this year, according to Treasury Secretary Steven Mnuchin.
So-called carried interest, or the share of profits that private-equity and hedge-fund firms earn from the investments they make, is currently taxed at a lower rate than ordinary income. Mnuchin addressed the loophole while on stage at the conference, referring to tax reform more broadly as his “number one priority.”
Trump has been pushing to slash the federal corporate tax rate – currently as high as 35 percent – to 15 percent."
"Jamie Dimon Slams Bitcoin as a ‘Fraud’.
Dimon differentiated between the bitcoin currency and the underlying blockchain technology, which he said can be useful. Still, he said banks’ application of blockchain “won’t be overnight.”
One place where cryptocurrencies and traditional finance are coming together is at CBOE Holdings Inc., the owner of the Chicago Board Options Exchange. Last month, the firm teamed up with Gemini Trust Co...with a plan to offer bitcoin futures."
"Canada’s CCP proposes buy-side clearing.
CCPS have introduced new clearing memberships for the buy-side in response to increased capital pressures on banks.
The Canadian Derivatives Clearing Corporation (CDCC) will allow corporates and pension funds to directly clearing their cash or repo fixed income trades.
The clearing house stated it seeks to extend the benefits of capital and collateral efficiencies through a new membership category called ‘Limited Clearing Members’ (LCMs).
Central Counterparties (CCPs) around the world have introduced new clearing memberships for the buy-side in response to increased capital pressures for banks, which has sparked a wave of exits from the clearing space.
German-based Eurex Clearing introduced its ISA Direct clearing service for pension funds and insurance companies last year, allowing them to directly clear their interest rate swaps and repo trades, with their bank clearing members taking care of their default fund contributions.
Other CCPs, such as those operated by CME and ICE, are understood to be developing a similar model."
"Legendary Investor Julian Robertson Warns of Bubble Trouble.
The Tiger Management founder says most stocks have “very high” valuations, though he doesn’t sound certain high-flying tech stocks among them."
"Leon Cooperman Warns a Market Correction Could Come at Any Time.
The stock market could see a correction at any time, according to Leon Cooperman, chairman of hedge fund Omega Advisors."
"Blackstone’s Schwarzman Isn’t Worried About High Valuations.
Blackstone CEO Steve Schwarzman said markets could go up “for some time” even as geopolitical risk remains a concern.
Schwarzman pointed to positive economic growth around the world and the promise of tax reform and infrastructure spending in the U.S. as events that could move markets higher."
"New capital may not be willing to replace trapped collateral: Albertini, Leadenhall.
If rates do not harden materially post-Irma, there may not be appetite for new ILS capital to come into the industry to replace collateral that is tied up at 1 January...
“New investors with capital on the sidelines are asking what rate uptick we are expecting, because quite frankly the size of the event will have an impact on pricing,” he says. “But we’re not talking about the kind of correction that we saw post Hurricanes Andrew and Katrina.”
He points out that this will be particularly challenging for funds that retrocession heavy. “What happens when you have an event which is not big enough to change the rates materially but traps the collateral?"
"Sovereign wealth funds turn more to digital, technology deals — report.
Digital and technology deals have grown to take a 27% share of deals financed by sovereign wealth funds over the past five years, at the expense of consumer-related deals, says new research by Boston Consulting Group.
Boston Consulting Group said sovereign wealth funds are also engaging with their deal targets earlier in their growth curves, with some serving as an alternative to an initial public offering. The management consultant said this strategy gives funds "access to technology life cycles that may lead to larger and more rapid returns as well as insights that can inform both their national strategic agendas and the growth strategies of their existing portfolio companies."
BCG added that sovereign wealth funds' lack of deep expertise and low presence in key technology hubs mean early-stage investments are often made through limited partnerships in established venture capital funds. "They then evolve these investments into more direct positions once the digital and technology businesses become classic growth capital plays; situations in which the underlying business model is effectively proven."
"Sovereign Wealth’s Hunt for the Next Unicorn."
"Meat producer Zwanenberg to concentrate on vegetarian market: FD.
The family firm, which has been in business since 1929, says it is moving with the times and the new strategy comes in response to the fall in meat consumption in Europe. ‘It is now quite normal for young people to not eat meat three days a week,’ ceo Ronald Lotgerink told the paper."
VIX ~10.58. 10-yr treasury volatility (TYVIX) ~4.19.
TYVIX blip to ~6.8 around 1pm today.
Implied Fed rate hike/cut probability for September 20th is ~0.0%/1.4%, November 1st is ~2.0%/1.3%.
"SCFI falls for sixth straight week.
The Shanghai Containerized Freight Index fell 3.5 percent just since last Friday, as rates from Shanghai to Europe, the Mediterranean and the United States all recorded weekly declines."
"NCDOT Considering Technology, More Truck Stops to Ease Parking Shortage.
[S]ome truck stop operators charge drivers a reservation fee, which is negotiated by trucking companies on the basis of their fuel contracts."
"Making way for new comers in ocean cargo arena.
As we noted last year at this time, the poor handling of Hanjin Shipping's downfall left many shippers scrambling for alternative carriers when the industry was also being disrupted by new alliances and consortia.
“We remain optimistic with regards to the remainder of 2017, but the longer term becomes more complex, as more mega vessels come into deployment,” he says.
Berglund observes that a “staggering” 78 new mega ships are due to come online for the Asia-Europe trades over the next two years, pushing capacity up by over 23%."
"New York’s Silicon Alley Is (Still) No Match for Silicon Valley."
"Leveling Up: Deals To eSports Startups On Track For 4th Annual High.
Investment in eSports startups continues to break records, and at the current run rate is on track to reach new highs in 2017. Both deals and funding to eSports startups have generally trended upward since 2013, though deals did see a small 1.2% dip (from 84 to 83 deals) in 2016.
Last quarter, Q2’17, eSports startups saw a quarterly deals record of 35 investments worth $873M in disclosed equity funding, the second-highest quarterly funding amount since 2013."
"Rolls-Royce planning autonomous naval ship for patrol, surveillance and mine detection."
"Japan trials driverless cars to help elderly people get around in rural areas.
Japan is starting to experiment with self-driving buses in rural communities such as Nishikata, 115 km (71 miles) north of the capital, Tokyo, where elderly residents struggle with fewer bus and taxi services as the population ages and shrinks."
"Lyft and Drive.ai Gear Up to Test Autonomous Ride Sharing."
"Lab-grown Bone Cell Breakthrough Heralds New Benefits for Orthopedics.
In a paper in the journal Nature Biomedical Engineering, the researchers describe how they have used measurement technology, based on the sophisticated laser interferometer systems built for gravitational wave detection of astrophysical objects, to turn mesenchymal cells taken from human donors into bone cells in three dimensions. These 3-D living bone grafts, when implanted into patients in the future, will be able to repair or replace damaged sections of bone.
Nanokicking subjects cells to ultra-precise, nanoscale vibrations while they are suspended inside collagen gels. The process of nanokicking turns the cells in the gels into a "bone putty" that has potential to be used to heal bone fractures and fill bone where there is a gap."
"Air pollution changes what bugs colonise our airways.
Higher levels of pollutants in the air correlate with reduced diversity of bacteria in our nose, hinting at a possible mechanism for why pollution causes disease."
Startup/SME of the Day.
Powerful sensor technology for on-street parking detection and management
Cleverciti brings together all aspects of smart parking management technology in one integrated system — from overhead sensors to mobile apps, management software and analytics. With our system and sensor technology for smart on-street and open-air parking, we aim to reduce search traffic and CO2 emissions, and help solve some of the most urgent challenges facing cities today."
"Historic Centre of Riga.
Riga was a major centre of the Hanseatic League, deriving its prosperity in the 13th–15th centuries from the trade with central and eastern Europe. The urban fabric of its medieval centre reflects this prosperity, though most of the earliest buildings were destroyed by fire or war. Riga became an important economic centre in the 19th century, when the suburbs surrounding the medieval town were laid out, first with imposing wooden buildings in neoclassical style and then in Jugendstil . It is generally recognized that Riga has the finest collection of art nouveau buildings in Europe."
DE: CPI, 2:00 AM ET
CH: Producer and Import Price Index, 3:15 AM ET
GB: Labour Market Report, 4:30 AM ET
EZ: Industrial Production, 5:00 AM ET
US: MBA Mortgage Applications, 7:00 AM ET
US: PPI-FD, 8:30 AM ET
US: EIA Petroleum Status Report, 10:30 AM ET
US: Treasury Budget, 2:00 PM ET
AU: Labour Force Survey, 9:30 PM ET
CN: Fixed Asset Investment, 10:00 PM ET
CN: Industrial Production, 10:00 PM ET
CN: Retail Sales, 10:00 PM ET
https://tradingeconomics.com/calendar (More complete listing, including consensus)