Coin News

Josh Brown, the money manager and bitcoin bear-turned-bull, had some harsh words for initial coin offerings (ICOs) in a new blog post.

There is a surprising potential winner from China's ban on North Korean coal: Mongolian coal exporters.

That's according to Christopher Wood, author of CLSA's weekly "Greed & fear" newsletter, who cited what his team heard while in Ulaanbaatar, the capital of Mongolia earlier this week.

"Mongolia should be profiting handsomely from Beijing's ban on North Korean coal imports," he wrote.

"Talking to coal exporters there, 'Greed & fear' hears that demand from China for coal is strong while, interestingly, in stark contrast to past practice, China SOE steel producers now pay on time."

China announced a ban on North Korean coal, iron, iron ore, and lead in August in an effort to apply more economic pressure on the reclusive nation amid escalating tensions surrounding North Korea's missile and nuclear tests. North Korean coal recently made up about 10% of China's coal imports, according to data cited by Wood.

Much attention has been paid to North Korea's commercial and financial ties to China. Some have argued that the North Korean crisis could be "solved" if China applied economic pressure on the isolated government. Others, however, dispute the effectiveness of that strategy or note that there are limits to China's willingness to cooperate with the United States' agenda.

Mongolia's mining sector has recently seen stronger growth, according to data from BMI Research. Total coal earnings rose fourfold in the first half of 2017 because of China's ban on North Korean imports and higher coal prices, analysts said in a note to clients earlier this week.

The BMI Research team also noted that Mongolia's largest coal producer, the state-owned company Edenes Tavan Tolgoi, said in August that its production was 4.6 times higher in the first seven months of 2017 compared to the same period in 2016.

"Still, the situation is not as good as it could be with 160 kilometer long queues of coal-bearing trucks at the key boarder crossing," Wood said in his note.

The lines on the border between the two countries have increased after Khaltmaa Battulga, who questioned Mongolia's heavy economic reliance on China, won the Mongolian presidential election in July, he added.

SEE ALSO: Here's what North Korea trades with the world

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NOW WATCH: Bitcoin's bubble swells with a new record high

Stocks earned a small gain for the week after a mostly quiet day of trading for the three main indexes. Health insurance and hospital stocks gained following news that the GOP's latest attempt to repeal Obamacare appears doomed.

Here's the scoreboard:

• Dow: 22,346.97 -12.26 (-0.05%)
• S&P 500: 2,502.42 +1.82 (0.07%)
• Nasdaq: 6,425.59 +2.90 (0.05%)

1. Sen. John McCain of Arizona may have dealt a fatal blow to the GOP's latest healthcare legislation. In a statement, McCain said the lack of "regular order" in crafting the legislation meant he could not support it. 
2. T-Mobile and Sprint are closing in on a deal. Japan's SoftBank Group, which controls Sprint, will own 40% to 50% of the combined company, two sources familiar with the matter told Reuters. 
3. JPMorgan CEO Jamie Dimon doubled down on his anti-bitcoin position, saying cryptocurrencies like bitcoin and ether 'are a kind of novelty.' "It's creating something out of nothing that to me is worth nothing," Dimon told CNBC-TV18 in New Delhi. "It'll end when people lose a lot of money."

Additionally: 

ROBERT SHILLER: Stocks look just like they did right before the 13 most recent bear markets

The 'death rate' of America's biggest companies is surging

It sounds like Trump's people have fallen for big pharma's nonsense, hook, line and sinker

Trump's people are back to giving really disconcerting interviews about the auto industry

Rents are finally flatlining in San Francisco and New York — here's what's causing it

Traders are betting billions against Disney

Join the conversation about this story »

NOW WATCH: THE BOTTOM LINE: Gary Shilling on expensive stocks and Alibaba vs. Amazon

Healthcare stocks got a boost Friday afternoon when Senator John McCain of Arizona spoke out against the proposed Graham-Cassidy healthcare bill, which is currently making its way through the Senate.

McCain, who dealt the final blow to Republicans’ previous attempt at repealing the Affordable Care Act, said lawmakers “should not be content to pass health care legislation on a party-line basis.”

His statement sent the S&P 500 healthcare index, which consists of 10 stocks, up 0.45%.

Here are some of the most notable movers:

• Tenet Healthcare (THC) +3.45%
• LifePoint Hospitals (LPNT) +1.87%
• Community Health Systems (CYH) +1.92%
• HCA Holdings (HCA) +1.34%

Shares of Humana (HUM) initially spiked as high as 0.3%, but fell to trade down around 0.21% mid-afternoon.

Senators Lindsey Graham and Bill Cassidy unveiled their last-ditch attempt at repealing the Affordable Care Act last week. You can read more about the details of the bill from Business Insider's Bob Bryan here.

A vote was originally scheduled to take place next week, but as lawmakers scramble to hammer out the details, that is looking less and less likely to happen.

SEE ALSO: John McCain just dealt the GOP's latest healthcare bill a critical blow

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NOW WATCH: Bitcoin's bubble swells with a new record high

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A new analysis says 21 million more people would have no insurance under the new GOP healthcare bill. 

Over 20 million more people could go without health insurance if the Graham-Cassidy healthcare legislation is signed into law, according to a study from the Brookings Institution published Friday.

The future of the bill looks shaky. Sen. John McCain said that he would not support the bill, dealing the legislation a potentially fatal blow. The healthcare bill could also blow up in the GOP's face because of an obscure Senate rule.

In finance news, the founder of the world's largest hedge fund, Ray Dalio, told Business Insider's Henry Blodget that the US economy looks like 1937 and we need to be careful.

Uber has lost its license to operate in London. Also in London, Rubicon, a macro hedge fund based there, has lost a third of its value this year in its flagship fund.

In other news:

• The 'death rate' of America's biggest companies is surging
• ROBERT SHILLER: Stocks look just like they did right before the 13 most recent bear markets
• Jamie Dimon bashes bitcoin again, says cryptocurrencies 'are kind of a novelty'

A fix for San Francisco's sinking skyscraper could cost upwards of $100 million, and no one wants to foot the bill.

Facebook is dropping $35 million to rent a beautiful, earthquake resistant skyscraper in San Francisco – take a look inside.

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NOW WATCH: Shiller says bitcoin is the best example of a bubble in the market today

The post SegWit2X and the Case for Strong Replay Protection (And Why It's Controversial) appeared first on Bitcoin Magazine.

Tesla is set to close lower for a fourth-straight session on Friday. Shares are down 3.17% as of 1:57 p.m. ET, and have been falling since hitting an all-time high of $389.61 on Monday.

The day after its record high, Jefferies initiated coverage of the company with an underperform. Analyst Philippe Honchos said Tesla's progress is impressive thus far, but that he doesn't expect it to scale as well as other analysts are hoping for. Honchos set a price target of $280.

Honchos also pointed out that the company's attempts to vertically integrate are not panning out as well as it had hoped. Two days after Honchos published his note, a CNBC report said that Tesla is partnering with AMD to develop a new autonomous driving chip unique to Tesla. Details about the chip are still unknown, but it could help Tesla to loosen its reliance on Nvidia for specialized self-driving processing chips.

Business Insider's Matt DeBord points out that despite small blips of news, Tesla's story is little changed since announcing the Model 3. The company hopes to be making 20,000 vehicles by the end of the year as it works through its backlog of about 450,000 preorders.

The next big announcement from Tesla is expected to come later this year, when the company unveils its new semi-truck. The truck is expected to have a range of 200 to 300 miles on a single charge and cost around $100,000, though details are sparse ahead of the announcement.

Tesla shares are up 65.17% this year.

Click here to watch Tesla's stock trade in real time...

SEE ALSO: Tesla hits an all-time high

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NOW WATCH: Bitcoin's bubble swells with a new record high

Bitcoin and cryptocurrency enthusiasts are dabbling in carnivory, eating all meat and zero plants. It's keto on steroids.

Investor and anarcho-capitalist Doug Casey recently argued that bitcoin qualifies as money – but he's not sure it'll last in the long term.

You're probably not going to use digital currency in your business. But you could personally invest in it, or fundraise using it.

Shares of Apple are down 1.69% to trade at $150.95 on the first day of availability for the new iPhone 8 and 8 Plus.

Shares have been falling since the company announced several new products, including the iPhone X, on September 12. Shares are down about 7.07%, or $11.91, since the market opened on the day of the launch event. That fall is equivalent to about $61 billion in value lost since the announcement.

Friday marks the first day the iPhone 8 and 8 Plus are available for sale. The flagship iPhone X was likely delayed due to component supply constraints and is set to be released on October 27 of this year.

Many analysts are wondering what demand for the new iPhones will look like. Many think Apple will sell a large number of devices in a "supercycle" of upgrades but are unclear which phone consumers will gravitate toward. The new iPhone X features a redesigned form factor, which should help sales, but costs $1,000, which may be too much for some consumers.

The high-end phone space is heating up, adding pressure to Apple's dominant hold on the market. Google announced a partnership with HTC which will beef up Google's nascent hardware division, and many see the deal as a strong step toward releasing an iPhone competitor by Google.

Apple fell around 1.5% on Thursday after the HTC-Google deal was announced.

Click here to watch Apple's stock price in real time.

SEE ALSO: Apple is falling after Google inks a deal with HTC

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NOW WATCH: Bitcoin's bubble swells with a new record high

Disney's stock has had a rough time lately, falling 4.4% in a single day earlier this month after CEO Bob Iger threw cold water on the company's 2017 profit outlook.

And traders don't look like they'll ease up on selling any time soon.

Short interest — a measure of wagers that share prices will drop — now sits at more than $2.7 billion after surging by $696 million in the last month alone, according to data analytics firm S3 Partners. That increase was the fifth-largest out of any American company over the period.

Also adding to pressure on Disney's stock was the company's August 8 announcement that it will terminate its streaming agreement with Netflix in 2019. While the entertainment titan also has plans for its own streaming portal for both Disney and Marvel content — as well as an online-based ESPN network — investors have been less than convinced. They've sent shares 7.6% lower over the past six weeks, badly lagging an S&P 500 that's repeatedly soared to new record highs.

If short sellers want to keep loading up on bets against Disney, they won't be met with much resistance, S3 said. The cost to borrow shares to short is sitting right around normal levels, while there's also "more than enough" stock available to borrow, according to the firm.

Looking at the big picture, while Disney is the biggest target for stock shorts in the movies and entertainment sector, the whole industry is feeling pressure. Short interest in the group is up $1.7 billion, or 29%, this year, S3 data show. And more than $1.1 billion of that increase has occurred in the past 30 days.

So regardless of Disney's own fundamentals, it also looks to be a lightning rod of sorts for sentiment in its industry. Stay tuned to see if the company's reorganization efforts pay off in the long run.

SEE ALSO: The 'death rate' of America's biggest companies is surging

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NOW WATCH: Bitcoin's bubble swells with a new record high

The Commodity Futures Trading Commission has filed a lawsuit against a New York-based man and his company for allegedly running a bitcoin scam.

The post Vaultoro Continues on Its VC Funding Road to Future Growth With Finlab AG appeared first on Bitcoin Magazine.

Stocks look dangerously close to a bear market, but that doesn't mean it's time to sell everything, according to the Nobel-winning author Robert Shiller. 

In a post on Project Syndicate Thursday, Shiller said the cyclically adjusted price-to-earnings ratio he helped develop was useful in predicting returns over the next decade. The gauge values stocks based on the past 10 years of earnings to smooth out periods when growth or weakness was abnormal.

In the peak months before bear markets — widely defined as declines of 20% or more —  the CAPE ratio was above its average of 22.1. On Friday, it was slightly above 30.

The market's inactivity is also a reason to be wary, Shiller said. Stock-price volatility was lower than average in the year leading up to the peak month before all of the last 13 bear markets, Shiller wrote. It's currently lower than the 3.1% average for the time frame including those bear markets.

Does this mean that a bear market is imminent? Shiller says no.

"Such episodes are difficult to anticipate, and the next one may still be a long way off," he said.

Still, this "analysis should serve as a warning against complacency," Shiller said. He continued: "Investors who allow faulty impressions of history to lead them to assume too much stock-market risk today may be inviting considerable losses."

Uncertainty around when the next bear market could come is partly why most strategists at major Wall Street firms are reluctant to turn bearish even as they continuously warn that stocks are overvalued. The median year-end S&P 500 forecast among strategists tracked by Bloomberg is 2,500, implying a nearly 12% gain for the market in 2017.

They wouldn't want clients to miss out on the late stages of the bull market, which is typically when returns are the highest. Also, double-digit earnings growth and an economy nudging a 3% growth pace are attractive. 

That doesn't take away from the fact that stocks are overvalued. But this fact alone is not a reliable buy or sell signal, according to Laszlo Birinyi, the president of Birinyi Associates, who was one of the first to nail the current bull market.

Here's how he recently put it to Business Insider's Joe Ciolli (emphasis added):

"We can catalog a bunch of articles [on the Shiller CAPE ratio] that show no one's ever said to buy. It's always been 'the market's overpriced,' 'the market's expensive,' 'the market's high,' but no one's ever said buy. In July 2009, there were some articles saying that according to some valuation measures, the market was fully valued. In July 2009! To me, something that's never told me to buy is not something I'm going to listen to when deciding when to sell."

SEE ALSO: Investing guru Byron Wien breaks down why market bears will be dead wrong for a few more years

DON'T MISS: ROBERT SHILLER: Bitcoin is the 'best example right now' of a bubble

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NOW WATCH: GARY SHILLING: The Fed is wrong about wage inflation

Litecoin is again trading below $50, just three weeks after setting a new all-time high above $100.

JPMorgan CEO Jamie Dimon doubled down on his anti-bitcoin position, calling cryptocurrencies like bitcoin a 'kind of novelty.'

While talking to CNBC India on Friday, the billionaire banker said the recent proliferation of initial coin offerings, a red-hot cryptocurrency-based fundraising method, and digital coins like bitcoin was concerning.

"It's creating something out of nothing that to me is worth nothing," Dimon said. "It will end badly."

To raise money through an ICO, companies create their own digital coin or token. Investors have poured into ICOs this year with some companies raising millions of dollars in a matter of seconds from token sales.

Friday marked the second time this month Dimon has publicly bashed bitcoin and digital currencies. At the Barclays Financial Services Conference on September 12, Dimon called bitcoin a 'fraud' that would eventually blow up.

Dimon said Friday he thought governments would impede further growth of digital coins. According to Dimon, currencies need government backing.

"Right now these crypto things are kind of a novelty." Dimon said. "People think they're kind of neat. But the bigger they get, the more governments are going to close them down."

Chinese regulators, already, are moving forward to shut down bitcoin trading in the country.

Aaron Lasher, the chief marketing office at Breadwallet, a bitcoin technology company, told Business Insider that Dimon's comments don't surprise him because digital currencies are a direct attack on his business.

"Every dollar in cryptocurrency is another dollar in value that JPMorgan cannot monetize," Lasher said. "What does it mean when a software company 'manages' as much money as a traditional bank?"

Blockswater, a Swedish algo-based liquidity provider, has filed a formal complaint to regulators against Dimon, claiming his comments on September 12 are tantamount to spreading "false and misleading information" about cryptocurrencies, according to reporting by City AM.

JPMorgan spokesman Brian Marchiony declined to comment.

As for bitcoin, the digital coin was trading down more than 1% Friday morning at $3,575 per coin.

SEE ALSO: Bitcoin enthusiasts have figured out a way to get around a China trading ban

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NOW WATCH: A top analyst recommends buying Facebook, Amazon, Netflix and Google shares

LONDON — The British pound has dropped close to 0.5% during afternoon trading on Friday as investors digest the words of Prime Minister Theresa May as she delivers her key Brexit speech in the Italian city of Florence.

May is currently delivering her most comprehensive address on Brexit since the now infamous Lancaster House speech in January, when she first set out her Brexit vision.

Britain will continue to pay tens of billions of pounds to the EU for years after Brexit, May confirmed.

The prime minister said that the UK is open to a "time-limited" transition period which could mean Britain continuing to pay into EU budgets until at least 2021. 

The PM did not state a specific figure in her speech but has reportedly opened the door to Britain paying between €20-40bn to the EU after it leaves in 2019, in a commitment that is already angering Brexit-supporting Conservative MPs.

May also said that Britain will not look for an "off the shelf" deal with the EU similar to that of Norway or Canada, but instead look for a bespoke deal.

The market has not reacted well to May's words, with sterling pulling back sharply. Here is the chart showing sterling's day as of 2.49 p.m. BST:

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NOW WATCH: RAY DALIO: Bitcoin is a speculative bubble

Savor the time you have with the companies in the S&P 500, because in 10 years, half of them will be replaced.

The length of time large-cap stocks have spent in the benchmark index has been declining, from 33 years on average in 1985, to 20 years as of 1990. And their window is forecast to get even smaller in the future, shrinking to 14 years by 2026, CLSA wrote in a client note, citing data from Innosight.

Those dwindling S&P 500 shelf lives are being driven by record merger and acquisition activity, as well as the rapid growth of startups that are achieving multi-billion dollar valuations faster than ever, said CLSA investment strategist Damien Kestel.

"A period of relative stability is ending," Kestel wrote in a client note. "An increasing number of corporate leaders will lose control of their firm's future."

While getting the boot from a major index like the S&P 500 isn't the end of a world for a company, it can certainly have some adverse effects. After a stock is no longer included in various index funds and exchange-traded products tracking the gauge — some of which are among the most heavily-traded in the world — it can see a large drop in trading volume and overall investor interest.

Still, it's also important to note that increased turnover in major indexes isn't directly negative for the market as a whole. Each company that's removed from the S&P 500 is replaced by another, in what amounts to a simple rotation.

Here's a look at which stocks have shuttled in and out of the benchmark during the eight-year bull market, according to CLSA:

Companies that have entered the S&P 500 over the past eight years: Dollar General, Facebook, Regeneron, Accenture, Fossil, Level 3 Communications, Activision Blizzard, Trip Advisor, PayPal, Universal Health Services, Altera, Under Armour, Illumina, Seagate Technology, NRG Energy, Netflix

Companies that have exited the S&P 500 over the past eight years: Family Dollar, Eastman Kodak, Covidien, Computer Sciences, Abercrombie & Fitch, Sprint, International Game Tech, JC Penney, National Semiconductor, Safeway, HJ Heinz, US Steel, Radio Shack, Dell Computer, Avon, The New York Times

SEE ALSO: One of the market's hottest trades is riskier than ever

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NOW WATCH: Bitcoin's bubble swells with a new record high

Jamie Dimon, CEO of JPMorgan Chase bank, has expanded on his recent criticism of bitcoin, warning "it will end badly" for the tech.

LONDON – Startup bank Starling is seeking to raise £40 million from investors in a new funding round to drive international expansion.

The bank, which opened to the public earlier this year, has appointed advisory firm Quayle Munro to oversee the fundraising, according to Sky News.

According to the report, Starling plans to use the money to expand into other European markets, with the first of these likely to be Ireland, where it recently gained a passport — which will allow it to access EU markets after Brexit.

Insiders also told Sky that the bank was working on developments for its domestic UK consumers.

Earlier this year Business Insider reported that the bank had spent nearly £8.3 million in the year to November 2016 on "designing, building, and testing the software to support the banking platform." Although it made pre-tax losses of £4.3 million in 2016, directors reported in accounts filed with Companies House that they were confident the bank can continue.

US quant trader Harald McPike has invested $70 million (£52 million) into the business since January 2016. 

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NOW WATCH: THE BOTTOM LINE: A lot of talk of a bitcoin bubble and a few good reasons to believe tech isn't one

Back from the front lines of Syria, infamous bitcoiner Amir Taaki plans a bitcoin-based economy in the war-torn nation, and he's looking for help.

LONDON — Shares in food delivery platform Just Eat briefly jumped on Friday morning after it was ruled that ride-hailing app Uber will no longer be allowed to operate in London, its biggest UK market.

Shares climbed aggressively just after 11.00 a.m. BST (6.00 a.m. ET), jumping roughly 20 pence per share to a high of £6.9350.

The rationale behind the jump seems to be that traders believed that the ruling from Transport for London — which said Uber was not "fit and proper" to hold a licence — will have a negative impact on Uber's food delivery business Uber Eats, and allow Just Eat, a direct competitor, to gain market share.

This is not the case, with the ruling impacting only Uber's core ridesharing business.

"The licence only applies to private-hire operations as it’s granted by Transport for London so UberEATS is not impacted by the licence – or lack of," an Uber statement given to Metro said.

Traders seem to have realised their mistake in fairly short order, with their shares in Just Eat falling off their highs fairly quickly.

Here is the chart showing the jump and subsequent pull back:

TfL said Uber was not "fit and proper" to hold a licence, and said the firm's approach to reporting serious driver offences, approach to driver medical and safety checks, and use of its secret "Greyball" software to dodge transport officials all contributed to its decision.

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NOW WATCH: THE BOTTOM LINE: A lot of talk of a bitcoin bubble and a few good reasons to believe tech isn't one

The developers behind a bitcoin privacy solution called Dandelion have unveiled a new roadmap that addresses previously discovered code issues.

• Exchange traded funds have grown 500% in value since 2008 to $4 trillion.
• Deutsche Bank's Long-Term Asset Return Study examines chance that ETFs could be the trigger of the next major crisis.

LONDON — Financial crises have all sorts of triggers

The 2008 crisis started with the collapse of the sub prime mortgage sector in the USA and wild speculation in the tech sector in the 1990s caused the dot-com bubble to burst. 

While crises are hard to spot by their very nature, that hasn't stopped Deutsche Bank strategist Jim Reid and his team attempting to categorise all the events that they believe could be catalysts for the next big one.

We've already written about the potential for Italy's fragile political and economic situation to trigger a new crisis, as well as the risks a breakdown in Brexit talks would pose — but there is one more threat in Deutsche Bank's report that we feel is worth looking at.

That is "(A lack of) Financial Market Liquidity…and changing market structure," with the rise of exchange traded funds (ETFs) of particular note.

An ETF is a passive fund which tracks an index, rather than an active investment, and seeks to outperform a given index through frequent buying and selling of individual investments.

ETFs have seen a boom in the ten years or so since the last crisis, with growing numbers of investors opting to invest in ETFs rather than actively-managed funds, which are associated with higher fees, and have offered lower returns over the last decade.

Growth in the amount of money invested in ETFs is "extraordinary," Reid and his team say. "Putting the numbers in perspective, including ETPs (which make up a much smaller percentage), the global AUM of exchange traded products (all asset classes) is now over $4tn. This compares to around $800bn or so in 2008."

Here is the chart:

ETFs have grown rapidly, but their resilience has not really been tested by any significant market hardship, leading some observers to question if the sector will be able to cope with a substantial market correction should one come in the near future.

This is especially true when considering that some believe ETFs can distort the markets by encouraging investors to put money into big companies — simply because they're big names — regardless of their market fundamentals (things like price-earnings ratios, return on equity etc.)

Here's Reid's explanation (emphasis ours):

"One argument is that passive investing naturally favours large caps when picking constituents based on factor style (for example momentum, growth etc). In theory this means that the biggest companies are getting bigger, regardless of fundamentals.

The concern therefore being that these companies are perhaps more susceptible to overvaluation and the gap between the small/mid to large caps also widening. This could potentially mean that risks are amplified when you see a big market correction, which arguably ETFs haven’t yet been tested with yet."

ETFs did get something of a test around 18 months ago, Reid and his team write, when a drop in the oil price caused a sell-off in the high yield bond markets. Some believe that ETFs made that sell-off worse, while others believed ETFs helped provide liquidity to the market, preventing a worse correction.

"In reality," Deutsche Bank's argument goes "ETFs and ETPs have not yet been fully tested in a sustained bear market. So the real test could be when we see the next downturn and these products are faced with heavy redemptions. This will be particularly paramount for less liquid asset classes."

The ETF industry is yet to see how the asset class performs in a sustained bear market. We're currently in the second biggest bull market since the Second World War, so we might be waiting a while.

"The emergence of more and more exotic niche ETFs only complicates the landscape," Deutsche Bank says.

"The products warrant close attention particularly in the context of their surge in popularity for retail investors and as with any market still somewhat in its infancy, the real test is probably still to come."

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NOW WATCH: Shiller says bitcoin is the best example of a bubble in the market today

Ethereum's answer to bitcoin's Lightning Network will have one notable difference – a publicly traded token to be sold in a Dutch auction in October.

• A number of City analysts now say they do not believe hard Brexit will happen. 
• The Conservatives' election loss, plus Labour's turn toward the Single Market, has strengthened the pro-Europe majority of MPs in Parliament.
• There are only about 50 MPs who are hardcore eurosceptics. The rest are soft Brexiteers or outright Remainers.
• If an election were held today, Labour would end up with a working majority in the House of Commons, so Theresa May cannot afford to anger any more voters, according to YouGov.
• There is not enough time to negotiate a free trade deal with the European Union, so Britain must either accept hard Brexit or an off-the-shelf arrangement like the EEA.
• The government is already compromising on issues like a transitional period that keeps Single Market trading relations in place, acceptance of some aspects of European Court of Justice law, and acknowledging that the UK must pay a divorce bill.
• Wages are stagnant, inflation is rising, and the economy is growing weakly — none of these factors paint an economic scenario that is supportive for a government going for hard Brexit.

LONDON — Hard Brexit just isn't going to happen, according to Credit Suisse analysts Sonali Punhani and Neville Hill.

They told clients they should expect a "soft transition" with the EU until at least 2021, that maintains the status quo.

"Membership of the single market and customs union now looks very likely, in our view. 
[And] there is a rising probability that such a temporary 'soft transition' ossifies into a permanent arrangement." 

The reason: There are just too many logistical, political and economic factors trending in favour of soft Brexit, and almost none blowing the other way.

Their note is titled "Bretreat."

The Credit Suisse team is not alone.

All summer, like a dripping tap, one analyst after another — at Morgan Stanley, HSBC, Pantheon Macroeconomics, and Credit Suisse — has published research on why they see hard Brexit receding from view. Their conclusions are a stark contrast to what people read in the media, or hear in commentary from Foreign Secretary Boris Johnson and backbench Conservative MPs like Jacob Rees-Mogg.

"We think this noise is a distraction"

That stuff is just "noise," Punhani and Hill say, and should be ignored in favour of the reality beneath the surface:

"We think this noise is a distraction. Since the June general election we think there have been several meaningful shifts within UK politics that materially increase the probability that the UK will remain in the single market after 2019, possibly for a long time. And those shifts also mean the risk of a 'hard' Brexit in 2019 or beyond is diminishing." 


There is one big reason why hard Brexit — an exit from the EU without any of the bloc's Single Market or Customs Union advantages — is increasingly unlikely: Prime Minister Theresa May only has 13 months left to get a deal, which must be reached by October 2018 in order for a draft accord to be ratified by the EU before the Article 50 deadline expires in March 2019. That timetable is simply too small for the UK to negotiate.

"That would leave just nine months for agreement ... Trade deals usually take years"

Pantheon Macroeconomics analyst Samuel Tombs thinks the timeline is even shorter — only nine months:

"The absence of any progress on the first round of talks so far means that they likely won't be wrapped up in October, as both sides originally hoped. December is now considered the most likely date for talks to move on to a future trade deal. That would leave just nine months for agreement, as it will take about six months for E.U. member states to ratify the deal with their national parliaments. Trade deals usually take years, not months, to thrash out, so the only realistic way the U.K. will be able to avoid a cliff-edge is to remain in the single market and accept all the associated financial, legal and migration obligations."

Assuming no deal is reached in 2018, Britain's choice will either be to take a soft Brexit package deal — such as EEA or EFTA membership — or hard Brexit.

Hard Brexit is not tolerable to a majority of MPs.  

The House of Commons retained a solid pro-Europe majority despite the June election. This is Morgan Stanley's chart of Leave vs. Remain in Parliament:

"We expect the EU to force a choice between a soft or a hard Brexit which divides the government, likely triggering early elections"

Morgan Stanley analyst Jacob Nell and his team told clients on September 3 to expect another general election in 2018: 

"We expect the EU to force a choice between a soft or a hard Brexit which divides the government, likely triggering early elections, a growth standstill and a debate on easing policy. A softer Brexit does now look somewhat more likely, but we lack conviction, since we think the Brexit outcome will depend on the outcome of a future election, and recent UK elections have delivered unexpected results."

Such an election would deliver a Labour government with a very narrow working majority, assuming it could put together a coalition with the pro-Remain Scottish National Party, the Liberal Democrats, and the Green Party, according to this analysis by Credit Suisse:

"We already see some evidence of a shift"

The political reality is that May will need to deliver a Brexit deal that is palatable to the existing remain majority if she wants to avoid calling another election that she would surely lose. 

And even if Theresa May were to survive such an election, "multiple constraints work against a hard Brexit,"  Nell and his team say:

"Clearer evidence of a Brexit-related slowdown in the UK economic data strengthens the hand of those calling for a 'jobs- first' Brexit. We think that these factors – parliament, negotiations, economy – will drive a realignment, with the UK pursuing a softer version of Brexit."

"We already see some evidence of a shift, with the UK government more explicitly acknowledging financial obligations to the EU and the possibility of an ongoing role for the ECJ after exit, and the UK opposition party coming out in favour of staying in the single market and the customs union until a final agreement has been reached."

And then there is the money.

As this chart from HSBC shows, our closet and biggest trading partners are all in Europe or, in the case of the US and Canada, governed by EU trade treaties:

Offsetting a loss of EU trade "would require a 68% rise in UK exports to China"

"66.3% of UK imports are currently tariff-free," according to HSBC analysts Douglas Lippoldt and George A. House. They have published a series of notes describing how difficult economic life will become for Britain if it is relegated to the bottom-rung of international trade as a mere member of the World Trade Organisation.

EU tariffs on external goods run between 5% and 15%, they say. Losing even a small percentage of that would require gigantic trade increases with other partners. "Offsetting a 5% fall in UK goods and services exports to the EU would require a 68% rise in UK exports to China," they told clients earlier this summer.

Pantheon's Tombs thinks the economy is already worsening, a key ingredient in the soft Brexit scenario. At the end of August he wrote:

"More evidence has emerged that uncertainty about the U.K.'s future trade ties is harming the economy. Last week's second estimate of Q2 GDP confirmed that output rose by just 0.3% quarter-on-quarter, the slowest rate in the G7, for the second consecutive quarter.

... As a result, politicians now can be certain that a Hard Brexit would damage the economy and that a further slump in sterling wouldn't provide any compensation for the imposition of trade barriers."

Even the analysts who think the government is likely to get a deal are becoming nervous. Oxford Economics' Andrew Goodwin has maintained throughout the summer that he believes the UK can get its own free-trade with the EU by March 2019.

However, between June and now, he reduced his estimated the likelihood of that deal occurring from 37% to 32%.  "The additional timetable pressures mean there is a greater chance of failure than there was before." He now puts WTO status — i.e. no deal — at a 40% likelihood.

Put that all together — the politics, the timeline, and the economy — and that's why the City believes soft Brexit will eventually materialise out of the fog. "Although the EEA may seem an unrealistic option at this stage, things could change. If the UK economy markedly worsens in the coming year, then the EEA could become more palatable to MPs and voters," Lippoldt says.

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• FICC Markets Standards Board analysed 200 years of enforcement cases, reviewing 400 cases from 19 countries.
• FMSB report found 26 common types of market misconduct, including insider trading and spoofing.
• The data is "a history of human greed," according to FMSB Chair Mark Yallop.

LONDON – For as long as there have been markets, there have been participants trying to gain an illegal edge. 

The FICC Markets Standards Board, the industry body overseeing standards in fixed income, currency and commodity trading, compiled a database of legal cases stretching back 200 years to try to understand the root causes of this market misconduct.

FMSB Chair Mark Yallop called the data "a history of human greed."

The analysis done by the FMSB, the first of its kind, reviewed over 400 enforcement cases from 19 countries, over a 200 year period, to identify behavioural patterns in market manipulation. Although they stopped at just over 400 cases, says Yallop, they "could have gone to 4,000." 

There were 250 cases between 2000 and 2017 alone.

Here's the chart:

According to Yallop, they found "relatively few common causes," but 26 types of behavioural misconduct, which repeat and recur over time.

These behaviours are "jurisdictionally and geographically neutral," and cut across asset classes. "This is rational," says the report, since "asset classes do not generate conduct risks — people do."

The patterns were also found to be "strikingly similar" to those found by the US Senate Committee in 1934, in its investigation into the causes of the 1929 Wall Street Crash — suggesting that malpractice has changed little.

Mark Steward, a senior UK market enforcement official, highlighted a case from over 100 years ago. In 1878, he said, the directors of the City of Glasgow bank were investigated, convicted and jailed for fraud, all in the space of a few months.

Comparing this to the speed and efficiency of current practices, he said, "where did we go wrong?" at a conference in London on Wednesday.

Patterns of behaviour

The FMSB's report calls for a "new and additional approach to the conduct problem." Despite existing rules and regulations, it says, "misconduct has not only continued, but the same patterns of behaviour have repeated and developed."

It gives the example of the Myanmar stock exchange, which had been open for just 16 weeks, and had listed only two stocks, before it issued its first warning against "spoofing" – when traders trick the market into thinking there's more demand to buy or sell than there actually is – in 2016.

Spoofing is one of the 26 types of misconduct the report identifies, alongside "wash trades," when traders buy and sell the same securities at the same time move money, "ramping," when traders artificially raise or depress the market price of securities, and insider trading.

Although electronic trading has improved transparency and auditability, says the report, market abuse cannot be "coded out." New technologies have come with potential new vulnerabilities, which are "growing in scale."

The increasing use of online trading systems, for example, risks unauthorised individuals logging on, either using false identities or by stealing the identities of legitimate traders.

New concerns have prompted the development of new controls, such as "kill switches," which cut off trading when pre-set limits are breached, and "speed bumps," which slow down trading by introducing microsecond delays.

An increase in investigations

According to Steward, there was a 75% rise in the number of FCA investigations into suspected wholesale or markets misconduct begun in the last year. This was aided by legislative changes introduced by the Market Abuse Regime (MAR), he said: "MAR has extended the scope of the reporting regime," resulting in "more participants reporting more data."

Steward also mentioned lawyer Andrew Green QC's assessment that the FCA had been misguided in its judgment that further investigations into the failure of HBOS would not have been successful, and were therefore not done.

"While there is little doubt that 'prospects of success' is an important element in considering whether enforcement resources should be deployed, I think it must be right that the merits of a case cannot be assessed before you have the relevant evidence, or even the key evidence," he said.

But, he said, Green's points had "prompted some thinking around what should be the starting point for an investigation." Weighing in on the problem at the AFME conference, Linklaters Partner Martyn Hopper said the world had "become a more complex place," which "poses problems, including for prosecutors."

Continued malpractice, says FMSB's report, is partly due to "the frailty of collective memory," as past scandals get further away. But both principles-based and rules-based regulation "struggle to address the causes of conduct failure."

What is also clear, says the report, is that "the lessons learnt by one firm or one generation do not necessarily pass to the next."

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NOW WATCH: THE BOTTOM LINE: A lot of talk of a bitcoin bubble and a few good reasons to believe tech isn't one

Good morning! Here's what you need to know.

1. British Prime Minister Theresa May should make the EU firm offers by next week to break the deadlock in Brexit talks if she wants an orderly withdrawal, Michel Barnier said. Barnier said he was wondering why there was still "major uncertainty" on all key issues.

2. UniCredit, Italy's biggest bank by assets, said it would propose to shareholders to remove a 5% cap on voting rights, as it moves to strengthen its governance. The bank will also ask shareholders to approve the mandatory conversion of its saving shares into ordinary shares and the empowerment of the board to present its own list of candidates for the election of directors.

3. Ivory Coast and Ghana, the world's top cocoa producers, plan to create a buffer stock of beans to exert more influence over world prices. The two West African neighbours produce over 60% of the global supply of the chocolate ingredient but have been hit hard by a sharp drop in world prices cause mainly by a glut resulting from bumper crops this season.

4. The US government is going after a New York man for allegedly operating a bitcoin Ponzi scheme. The US Commodity Futures Trading Commission said Nicholas Gelfman, a Brooklyn resident and head trader at Gelfman Blueprint, a New York-based firm, "fraudulently solicited" $600,000 from 80 clients in a bitcoin Ponzi scheme. 

5. Lufthansa is set to pick up a large part of insolvent rival Air Berlin, with easyJet also still in the running for assets, Reuters reported. Air Berlin's creditors met on Thursday to discuss offers for Germany's second largest airline and agreed the carve-up.

6. Chinese regulators are moving forward to shut down bitcoin trading in the country, but one executive says traders have a way to work around a ban. The Wall Street Journal's Steven Russolillo and Chuin-Wei Yap reported that bitcoin traders can still exchange their coins via messaging apps such as WeChat, the largest in China with over 900 million users. 

7. French businesswoman and heiress of cosmetics giant L'Oreal Liliane Bettencourt, 94, died, her daughter said on Thursday. The Bettencourt family, which founded L'Oreal, has a 33% stake in the company.

8. Australia's Macquarie has overtaken Goldman Sachs to break into the top three banks for commodities business. The rise of Macquarie marks a huge shake-up in commodity banking, typically dominated by elite US and European institutions until tough regulations forced withdrawals after the global financial crisis.

9. Chinese search engine Baidu announced a 10 billion yuan ($1.52 billion) autonomous driving fund as part of a wider plan to compete with rivals. The "Apollo Fund" will invest in 100 autonomous driving projects over the next three years, Baidu said.

10. Japan's Nikkei share average fell in choppy trade early on Friday, moving away from two-year highs as rising geopolitical tensions over North Korea sapped risk appetite. South Korea's Yonhap news agency reported North Korean Foreign Minister Ri Yong Ho as saying he believes the North could consider a hydrogen bomb test on the Pacific Ocean of an unprecedented scale.

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Main image:  FINANCIERS with PhDs like to remind each other to “read your Kindleberger". The rare academic who could speak fluently to bureaucrats and normal people, Charles Kindleberger designed the Marshall Plan and wrote vast economic histories worthy of Tolstoy. “Read your Kindleberger” is just a coded way of saying “don’t forget this has all happened before”. So to anyone invested in, mining or building applications for distributed ledger money such as bitcoin or ethereum: read your Kindleberger.Start with A Financial History of Western Europe, in which Kindleberger documents how many times merchants in different centuries figured out clever ways of doing the exact same thing. They made transactions easier, and in the process created new deposits and bills that increased the supply of money. In most cases, the Bürgermeister or the king left these innovations in place, but decided to control the supply of money and credit themselves. It is good for the king to be in charge of his own creditors. But also, it has always been tempting for private finance to create too much money. There is no evidence that money born on a distributed ledger will be clean of this sin.Distributed ledgers, which borrow private computers from around the world to update the same list of accounts, address one ancient ...

Main image:  FINANCIERS with PhDs like to remind each other to “read your Kindleberger". The rare academic who could speak fluently to bureaucrats and normal people, Charles Kindleberger designed the Marshall Plan and wrote vast economic histories worthy of Tolstoy. “Read your Kindleberger” is just a coded way of saying “don’t forget this has all happened before”. So to anyone invested in, mining or building applications for distributed ledger money such as bitcoin or ethereum: read your Kindleberger.Start with A Financial History of Western Europe, in which Kindleberger documents how many times merchants in different centuries figured out clever ways of doing the exact same thing. They made transactions easier, and in the process created new deposits and bills that increased the supply of money. In most cases, the Bürgermeister or the king left these innovations in place, but decided to control the supply of money and credit themselves. It is good for the king to be in charge of his own creditors. But also, it has always been tempting for private finance to create too much money. There is no evidence that money born on a distributed ledger will be clean of this sin.Distributed ledgers, which borrow private computers from around the world to update the same list of accounts, address one ancient ...

China reportedly told its banks to stop doing business with North Korea.

The People's Bank of China, the country's central bank, told banks to "strictly implement United Nations sanctions against North Korea," four sources told Reuters.

Reuters added that banks were "told to stop providing financial services to new North Korean customers and to wind down loans with existing customers."

The UN Security Council last week unanimously voted to levy a new round of economic sanctions in response to the country's recent nuclear provocations.

Much attention has been paid to the commercial and financial ties between China and North Korea in recent months. Some have argued that the North Korean crisis could be "solved" if China applied economic pressure on the isolated government.

In the 2016 "US-Korea Yearbook," published in the spring by the US-Korea Institute at the School of Advanced International Studies, Han May Chan, then a second-year student, briefly explained the argument that the success of economic sanctions might depend on China's participation. Decades of sanctions have left other world powers with less sway over North Korea, she said:

"The DPRK has grown accustomed to the hostile sanctions regime for decades. Therefore, the effectiveness and the success of the current sanctions regime actually depends solely on China and North Korea. Unless the DPRK believes that the benefits from trade with the international community are greater than the current security benefits of prioritizing its military-first economy, North Korea will have little incentive to change its policy."

Others, however, have questioned whether a strong response from China — and China joining North Korea's adversaries — could lead to the conclusion desired by the US and the UN: the denuclearization of North Korea.

Of North Korea's likely response should China turn against it, Jeffrey Lewis, the director of an East Asia program at the Middlebury Institute for International Studies, told The New York Times, "The last thing you would do in that situation is give up your independent nuclear capability."

He added: "The one thing you hold that they have no control over. You would never give that up in that situation."

The UN Security Council resolution, drafted by the US, aims to "cap North Korea's oil imports, ban textile exports, end additional overseas laborer contracts, suppress smuggling efforts, stop joint ventures with other nations, and sanction designated North Korean government entities," according to CNN.

China also previously announced a ban on imports of iron ore, iron, lead, coal, and seafood from North Korea.

Check out the full report at Reuters »

SEE ALSO: Here's what North Korea trades with the world

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The post Op Ed: Lessons From a Cryptocurrency Hack (A Public Service Announcement) appeared first on Bitcoin Magazine.

NEW YORK – Rubicon Fund Management, a large London hedge fund focused on trading around global economic events, has suffered a 33.2% loss in its flagship fund this year. 

The losses were disclosed in investor documents reviewed by Business Insider.

Ross Gillam, a spokesman for Rubicon at external PR firm Instinctif Partners, didn't respond to a request for comment.

In a July letter to investors reviewed by Business Insider, founder Paul Brewer attributed about half of the year's losses up until that point to wrong way bets on currencies. The fund had lost 27% after fees through mid-July, and has only added to losses since.

In a letter to clients this week, Rubicon did not explain what had caused the more recent losses.

The fund did say that it believed prices for dollars would increase in coming months, however.

The performance marks a sharp turnaround from last year, when the fund gained 7.3%, according to the investor document. It also stands in sharp contrast to other so-called macro hedge funds, which are breakeven for the year through August, according to data from HFR.

A newer fund that the firm runs, meanwhile, the Rubicon Dynamic fund, is up 13.14% this year through end of August, according to investor documents.  Those gains were mostly on bets from emerging markets. The fund launched in February 2016. 

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NOW WATCH: Shiller says bitcoin is the best example of a bubble in the market today

Former Commodity Futures Trading Commission head Bart Chilton wrote that bitcoin's volatility indicates artificial inflation of its price.