Katie Swift

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Katie Swift
 Katie Swift
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  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: MSCI REJECTS CHINA AGAIN FROM ITS EMERGING MARKET INDEX

    Newport legacy wealth management Seoul Korea thanks “Paul Clarke ” bbc.com for reproducing the following article.
    Lone broker with head in handImage copyrightAFP
    US stock index provider, MSCI, has again delayed the inclusion of China’s mainland domestic shares in its emerging markets index.

    Inclusion on the index would have been a major step forward for Beijing as it attempts to open up its financial markets and attract foreign capital.

    Regulation worries and accessibility for global investors were some of the reasons behind MSCI’s decision.

    MSCI is world’s biggest stock index provider.

    China has in recent months increased its efforts to reform its often volatile stock market, but MSCI said global investors were looking for more.

    “International institutional investors clearly indicated that they would like to see further improvements in the accessibility of the China A shares market before its inclusion in the MSCI Emerging Markets Index,” Remy Briand, global head of research at MSCI, said.

    ‘A long term story’
    BEijing skylineImage copyrightGETTY IMAGES
    Image captionBeijing has in recent months introduced significant improvements in the accessibility of the China A shares market for global investors, MSCI said on Tuesday
    The index provider said on Tuesday that China’s authorities had demonstrated “a clear commitment” in bringing accessibility of their A shares market closer to international standards.

    It also said it was looking forward to the “continuation of policy momentum in addressing the remaining accessibility issues.”

    However, analysts said they were not particularly surprised by MSCI’s decision.

    “It really was fifty-fifty regarding the inclusion,” Catherine Yeung from Fidelity Investment told the BBC.

    “What’s important to note is that while we have seen some significant improvements in terms of how foreign investors access domestic Chinese stocks, [but regarding] the criteria that was set last year, a lot of it still needs to be fulfilled,” she said.

    Ms Yeung said what was very interesting was that MSCI said the inclusion of A shares could occur within the next year “outside of the normal review period which falls every June”.

    “So if we see further developments in terms of regulation, in terms of how we access the market as investors from a foreigner perspective, then indeed we could see inclusion,” she said.

    “But don’t forget, it’s likely to be a partial inclusion, let’s say 5%, and inclusions do take years to actually be implemented.

    “So this is very much a long-term story.”

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: WALL STREET’S BIG BANKS ARE WAGING AN ALL-OUT TECHNOLOGICAL ARMS RACE

    Newport legacy wealth management Seoul Korea thanks ” Hugh Son and Dakin Campbel” https://www.bloomberg.com/ for reproducing the following article.

    Dimon, Blankfein, Gorman: Three great rivals are battling to control the $58 billion-a-year equities industry.
    Sunlight bounced off Goldman Sachs Group Inc.’s glass-and-steel Manhattan headquarters on a warm August morning in 2013. Eyes locked on their screens, traders and engineers shifted in their seats as exchanges prepared to open.

    This story appears in the April / May 2018 issue of Bloomberg Markets.
    Illustration: Thomas Pitilli for Bloomberg Markets
    Unbeknownst to anyone, the machines were about to revolt.

    Bam. Bam. Bam. Dummy trade signals that were supposed to stay within the company’s electronic systems broke loose and slammed into computers at the New York Stock Exchange’s options markets. So many orders crashed through that by 8:44 a.m., safeguards within Goldman Sachs sprang into action, severing the connection between the company and the exchanges.

    It took ages for anyone to notice the anomaly. At 9:01 a.m. an employee finally saw the blockage and lifted it. A river of mispriced orders surged through the restored connection. Minutes later, the volume triggered another stoppage. And another. And another.

    By the time the trades were blocked for the last time, less than an hour after they began, Goldman Sachs executed orders to sell more than 1.5 million options contracts for $1. The cause? A coder had mistakenly programmed a router to send placeholder bids as live orders. If not for the good graces of the options exchanges, the bank would have lost $500 million, according to the U.S. Securities and Exchange Commission. Cancellations and price adjustments reduced that to $38 million.

    The blunder, in one corner of the stock market, exposed a soft spot in the controls and technology at the company’s larger equities business. Despite being the dominant equities shop on Wall Street, its electronic operations had become almost an afterthought. Goldman Sachs had gotten to the top by catering to the types of companies that ruled financial markets for decades: long-short hedge funds and active asset managers. In the pre-crisis era, Goldman’s human traders made billions of dollars in profit and became the envy of their peers by using the company’s balance sheet to take risks.

    But as one of the greatest bull markets in history took off, professional stockpickers struggled to generate adequate returns. Volatility vanished as central banks placated markets. Trillions of dollars moved from active strategies into index and exchange-traded funds, favoring electronic platforms, where commissions are a fraction of voice trading. Quantitative hedge funds such as Renaissance Technologies and Two Sigma Investmentshoovered up assets while their old-school peers withered.

    The 149-year-old investment bank wasn’t alone in being slow to anticipate the seismic shift in equities. But as excuses go, Goldman Sachs had a couple of good ones. Senior executives worried about cracks beginning to form in the market’s foundations. And for more than a decade, Wall Street’s bond traders enjoyed unrivaled prosperity, buoyed by the expansion of new markets for derivatives and a decline in interest rates that made it more lucrative to simply hold investments.

    Few benefited more from this than Goldman Sachs, which became the most profitable company in Wall Street history under former commodities salesman Lloyd Blankfein, who may step down as chief executive officer as early as this year. Using house money to facilitate bond trades—or principal risk-taking—was far more lucrative than merely acting on clients’ behalf to execute stock orders. In 2009, Goldman traders reaped $33 billion in revenue, two-thirds of it from fixed income.

    But constraints brought about by the financial crisis ended the leverage that had fueled the boom. Fixed-income traders felt the brunt of the changes, and in the years since, equities traders —especially those with a technology background—have enjoyed a renaissance. Their rise has touched off a battle for supremacy that’s come down to only three companies: Goldman Sachs, Morgan Stanley, and JPMorgan Chase. These rivals are now locked in a technological arms race to control a $58 billion-a-year industry. As they each jockey for an edge over the other, no one who trades on Wall Street is safe.

    Around the same time as the options mishap in 2013, in another glass-and-steel office tower about 4 miles north of Goldman Sachs, Morgan Stanley traders were digging themselves out of a hole.

    Clients had abandoned the company during the financial crisis as subprime losses pushed Morgan Stanley to the edge of failure. The bank had caught a case of Goldman envy and plowed into mortgage-bond bets at precisely the wrong time. To survive a share plunge driven by short sellers, then-CEO John Mack lashed out at some of the same clients who paid them lucrative fees. The bank was saved by a $9 billion investment from Mitsubishi UFJ Financial Group Inc., but in the years immediately after the crisis, it seemed a shadow of its former self. An equities executive at a rival U.S. bank puts it this way: “I thought we left them for dead in 2010. I remember telling people, ‘These guys are roadkill.’”

    But the financial crisis had one gift for Morgan Stanley. Other banks that built a following with quants were damaged as well. Lehman Brothers Holdings Inc. went bankrupt. Three European banks—Credit Suisse, Deutsche Bank, and Barclays—didn’t adapt quickly enough to the new realities and were later forced to raise capital, sowing doubt among prime brokerage clients. So for hedge fund clients who wanted the latest trading technology, Morgan Stanley became the clear choice.

    Under Ted Pick, who became co-head of the equities business in 2009, the company went about persuading clients to come home. The bank was back, hungry and open for business, flush with liquidity for hedge funds to place bets. It emerged with a sharper focus: The new CEO, James Gorman, made it clear that the equities division, along with the company’s wealth management business, was key to the bank’s strategic vision.

    A paradox seen among some senior equities executives is that despite their high status and net worth, they often dress slightly shabbily. It might be intentional, part of the pitch: We don’t care what we look like. It’s all about you, valued client.

    Pick, 49, fits this description. The day he meets with a reporter, he’s got on a pair of beat-up loafers and a well-worn suit. He could use a haircut and a couple more hours of sleep. The walls of his office are bare except for some grainy photos of his children. His only windows face the equities trading floor: Densely packed with employees and computers, the vast room feels 5 degrees warmer than comfortable. Instead of being sequestered in offices, his managing directors are scattered amid their charges, the better to stay close to clients and the thrum of markets.

    Pick’s fervor for Morgan Stanley borders on the maniacal. Atop a mahogany cabinet—inherited from his predecessor, Vikram Pandit—are rows of manila folders filled with the minutiae of more than 30 quarters of equities results. Shortly after taking over the stock division, he divided the world into nine boxes—cash equities, derivatives, and prime brokerage across the Americas, Europe, and Asia—with the goal of improving in every segment. The full spectrum of offerings meant that whatever strategy or region a client needed in a given environment, Morgan Stanley was there. Pick keeps a close watch on all this data and, when the mood strikes, pulls out a folder to recite figures from a long-ago period.

    The company made investments that let clients send orders with the least possible delay by moving servers closer to exchanges and using wires that shaved microseconds off the process. It updated its low-latency trading system Speedway and, in 2012, embarked on Project Velocity, which anticipated the rising needs of quants and other institutions that were embracing algorithmic trading. The improvements strengthened what was already a leading electronic platform; almost a decade earlier, Morgan Stanley had been the first major broker to create an electronic swaps system, the preferred mode for quants to trade in equities. Quants favor the system because it gives them leveraged exposure to stocks without owning them and having to pay taxes on dividends.

    With the upgraded electronic system and revamped prime brokerage, Morgan Stanley enveloped clients in a cocoon of lightning-fast connectivity to markets everywhere and liquidity to short stocks. Its systems were robust enough for the biggest quants, and it could lease pipes and algorithms to smaller hedge funds that couldn’t afford the technological investments the company made.

    It all paid off. In 2014 the company grabbed the crown from Goldman Sachs, exceeding its rival in equities revenue for the first time in almost a decade. Under Pick, Morgan Stanley had gone from the recovery ward to the summit of the world’s most iconic market in four short years. And yet reaching the pinnacle hasn’t dulled their drive: Pick says they’re as hungry now as they were in 2010.

    In a sense, Morgan Stanley and Pick are reaping gains from a prescient bet made two decades earlier. When Pandit took over equity trading at Morgan Stanley in 1994, he noticed that the cost of computing power was collapsing. That, combined with abundant data on public exchanges that would enable automated trading, convinced Pandit of the need to prepare for a post-human equities market.

    “We realized that the human touch was interesting but actually a hindrance to what it took to really trade these markets correctly,” Pandit, who served as CEO of Citigroup Inc. for five years, says in the Midtown office of his investment company, Orogen Group. “The only thing you could do is figure out how you automated all the human aspects of trading, understanding what drove stock prices, and then used those algorithms to make markets.” So Pandit gathered math and science experts to open the Equity Trading Lab, or ETL, whose initial mission was to automate the trading floor.

    It helped that at the time Morgan Stanley was

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: THE ITALY PANIC MIGHT BE BAD NEWS FOR THE U.K.

    Newport legacy wealth management Seoul Korea thanks “Ian Wishart and Dara Doyle ” https://www.bloomberg.com for reproducing the following article.

    The crisis in Italy could be bad news for Britain.

    Italians’ flirtation with parties critical of the European Union is reminding the bloc why it wants to show the U.K. what it will lose with Brexit. It doesn’t want Britain to enjoy the same benefits of membership once it’s gone in case it tempts others to follow.

    The turmoil in Italy will only strengthen EU governments’ resolve that the U.K. suffer the consequences of its decision, three people familiar with the Brexit negotiations said. What makes it worse for the U.K. is that the Italian crisis, with an early election looming, coincides with the most crucial time in the U.K.’s withdrawal process.

    The Italy situation “complicates matters,” pro-EU Labour lawmaker Hilary Benn, who leads the U.K.’s influential House of Commons Brexit Committee, told Bloomberg TV in an interview. “One of the motivations for the EU in these negotiations is — as they’ve said repeatedly and publicly — that the U.K. can’t have as good a deal outside the European Union as we have had inside.”

    The EU’s chief Brexit negotiator, Michel Barnier, stepped up rhetoric last weekend on the need for the U.K. to be worse off. It was sparked by last week’s round of negotiations in Brussels in which European officials said they were taken aback by how much the British government wants to continue after Brexit as if Brexit never happened.

    Read more: Bill Gross Had Nightmare Day as Italy Roiled Bonds Worldwide

    “When it comes to the economy, and foreign policy, the best way to influence the decision of the European Union is to be in the European Union,” Barnier said in a speech on Saturday. Leaving the EU “has consequences,” he said.

    A key effect of Britain’s decision to stop European citizens from living and working freely in the country and to end the jurisdiction of the European Court of Justice is that it can no longer retain the benefits of the bloc’s single market, the EU has said.

    But the detail of future ties remains to be decided and the U.K. is pushing for a relationship of equals. That’s the sort of argument the U.K. may find more difficult to win in light of the euroskeptic surge in Italy, the people familiar with the Brexit talks said.

    One indicator is the EU’s opposition to the British government’s plan for a system of mutual recognition of standards that would allow the country to have access to the EU market while being free to set its own rules. Also, the European Commission recommends that the U.K. shouldn’t be a member of law enforcement agency Europol, shouldn’t have a major role in foreign policy decision-making and shouldn’t be able to participate fully in the Galileo satellite navigation project.

    It’s going to be a “very difficult summer” for Brexit if there isn’t much progress before an EU summit in June, Irish Foreign Minister Simon Coveney said in a speech in Dublin.

    Italian Message
    For Brexit talks to succeed, the U.K. must recognize that its “everything stays the same” stance is unacceptable to the EU, an EU official said last week.

    Brexit negotiators are seeking to conclude agreements on separation and the principles of future EU-U.K. ties in October. EU officials say the deal needs to send a message to euroskeptics in Italy and elsewhere that the bloc won’t adapt its rules to suit countries that want to leave.

    “One of the greatest challenges the European Union faces today is the fact that the advantages resulting from a country’s membership in the Union are simply taken for granted,” Luxembourg Prime Minister Xavier Bettel told the European Parliament on Wednesday.

    — With assistance by Francine Lacqua

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: THE NEXT EMERGING MARKET CRISIS COULD COME FROM CHINA

    Newport legacy wealth management Seoul Korea thanks “Patrick Commins” https://www.afr.com/ for reproducing the following article.

    Despite some dramatic moves in the currencies in countries such as Argentina, Turkey and Brazil, a broad EM crisis looks unlikely. In fact – and famous last words, I know – investors may need to get used to the fact that emerging markets are, as a whole, a lot less volatile than they used to be.

    That said, the scene in recent months has looked like a depressingly familiar one: a sharp and unexpected lift in US rates boosted the dollar and sparked a big inflow out of EM assets as global investors repatriated their money en masse.

    There were echoes of the so-called “taper tantrum” sell-off that struck almost exactly five years ago. It, too, was driven by fears of financial tightening in the US and hit emerging markets particularly hard. In our region, the sharp devaluation of the Indonesian rupiah and rushed response of the central bank over the past fortnight created fainter, yet still insistent, echoes of the Asian financial crisis.

    This is the worst case scenario; a full-blown debt crisis, which usually follows this script: emerging market currency falls, causing corporate debt to blow up, causing stress on the economy, causing further fall in the currency, and so on.


    The reality, at least so far, is a lot more benign, particularly in our region.

    During the taper tantrum the Indonesian rupiah – the focus of much recent attention – plummeted by around 25 per cent between May 2013 and February 2014, on Bloomberg data.

    Malaysia’s ringgit slumped 12 per cent over the same timeframe. This time around it has been Indonesia which has once again come under pressure as billions of dollars have fled the country’s financial markets in recent months. But the response has been much milder. Since February the rupiah has dropped only 4.4 per cent.

    More broadly Asian currencies as a group have only dropped 2 per cent against the greenback since the end of January, according to the Bloomberg JP Morgan Asian currency index.

    The common cause of EM countries’ debt crises of the 1980s and 1990s was a rapid build-up of external liabilities. The health of their financial systems thus became dependent on keeping the confidence of foreign investors. And the fact that these vulnerabilities were spread across the EM universe meant that once problems appeared in one economy, they quickly spread to the others.

    During the taper tantrum the Indonesian rupiah – the focus of much recent attention – plummeted by around 25 per cent ...
    During the taper tantrum the Indonesian rupiah – the focus of much recent attention – plummeted by around 25 per cent between May 2013 and February 2014, on Bloomberg data. Dimas Ardian
    This is how a devaluation in the Thai baht in 1997, which at the time accounted for just 0.5 per cent of world GDP, proved to be the trigger for a wider Asian financial crisis, point out Capital Economics economists Neil Shearing and William Jackson.

    “It also explains why investors are understandably nervous that recent events in Turkey and Argentina could presage broader problems in emerging economies,” Shearing and Jackson write.

    In a similar vein, the talk in 2013 was of the “fragile five” countries, all of which featured large and climbing current account deficits. They were India, Indonesia, Brazil, Turkey and South Africa. These were also the economies which suffered the largest falls in asset prices and were the only ones to lift interest rates.

    So far, aside from Argentina and Turkey, the fall-out in emerging markets has been limited.

    A rally Friday, sparked by Yellen's reassurance that turbulence in emerging markets won't harm growth in the US, was ...
    A rally Friday, sparked by Yellen’s reassurance that turbulence in emerging markets won’t harm growth in the US, was snuffed out by the selloff in biotechnology shares. AP
    Our region has been particularly resilient, even taking into account the billions in dollars pulled out of Indonesia’s capital markets. Asian currencies as a group have only dropped 2 per cent against the greenback since the start of February, according to the Bloomberg JP Morgan Asian currency index.

    That compares favourably to the 7 per cent drop in Latin American currencies. Indonesia’s rupiah has been the hardest hit in our region, falling 4.4 per cent. But swift action from Bank Indonesia looks to have stemmed the outflows and steadied losses in the country’s currency, equity and bond markets.

    So why have emerging Asian economies remained so resilient?

    For one, balance sheets generally look a lot more robust than they were even five years ago.

    Aside from Argentina and Turkey, the fall-out in emerging markets has been limited.
    Aside from Argentina and Turkey, the fall-out in emerging markets has been limited. Pedro Lazaro Fernandez
    In emerging Asia, only Indonesia, India and the Philippines are running current account deficits. Indonesia’s deficit of 2.5 per cent as a portion of GDP is the largest but hardly massive and much improved from more like 4.5 per cent during the time of the taper tantrum. Growth is robust, and inflation is contained across the region.

    If large external liabilities were the cause of past crises, its useful to have an idea of where the vulnerabilities lie in the emerging market world. The Capital Economics team add up current account balance to a country’s external debt that is due to mature over the next 12 months. They then express that as a percentage of foreign exchange reserves to gauge an economy’s external financing needs against its foreign currency assets. At between 140-150 per cent, by this measure Turkey and Argentina have “by far” the highest ratio, which explains why they have been hardest hit. Indonesia has the highest ratio in Asia, but is under 60 per cent.

    As a whole, EM foreign exchange reserves sit at $US6.6 trillion against well below $US1 trillion in the 1990s, on CBA numbers. The South East Asian region overall has a current account surplus.

    Not only are fiscal positions more sustainable, there have been several other positive developments in recent decades. Inflation targeting has improved monetary policymaking, currencies have been floated, and financial sector regulation has blunted the growth of foreign currency debt, particularly to households.

    In emerging Asia, only Indonesia, India and the Philippines are running current account deficits.
    In emerging Asia, only Indonesia, India and the Philippines are running current account deficits. AP
    Indeed, crises are much less common than they used to be.

    In the 1980s there were 88 instances of financial crises across the EM world, Capital Economics counts. In the ’90s there were 114. In the first 10 years of the new millennium the number had dropped to 33, and so far this decade there have only been 17.

    That’s not to say that higher US rates and a stronger greenback can’t pressure EM asset prices. They can, and probably will over the next 12-18 months. But it likely won’t be enough to tip a sell-off into a full-blown crisis.

    Which means investors should look elsewhere for the trigger for an EM meltdown. Unfortunately, we don’t need to look far.

    China’s economic transition from growth model based on a credit-fuelled, investment-led economy to a more sustainable one focused on consumption and services is probably the biggest wildcard for the global economy. The country has accumulated a mountain of debt in its pursuit of growth, and much of the debt has been hidden in the shadowy non-bank sector.

    In a recent speech, RBA governor Philip Lowe said: “If a major economic shock were to originate from China over the coming years, its origin is most likely to be in the Chinese financial system.”

    “It is too early to tell whether the authorities will be successful in managing the transition from a growth model heavily dependent upon the accumulation of debt to one where credit is less central,” Lowe said. “It is a very significant task.”

    If China is the biggest risk, then investors might be wise to assess EM risk through this lens. It is instructive to note, then, that while balance sheet weakness determined who suffered the worst during the 2013 taper tantrum, commodity producers – Brazil and South Africa (again), but also Malaysia and Russia – suffered most when China fears flared up in late 2015 with the botched devaluation of the renminbi. Australia, of course, would not be spared.

    Indeed, crises are much less common than they used to be.
    Indeed, crises are much less common than they used to be. Peter Braig
    All of which to say that while climbing US dollar rates have caused predictable pain across emerging markets, the next crisis will be made in China, not North America.

    These are not your parents’ emerging markets.

    China has accumulated a mountain of debt in its pursuit of growth, and much of the debt has been hidden in the shadowy ...
    China has accumulated a mountain of debt in its pursuit of growth, and much of the debt has been hidden in the shadowy non-bank sector. Reuters

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: EX-UBS TRADER BEATS US MARKET MANIPULATION CHARGE

    Newport legacy wealth management seoul korea thanks “The Local AFP” https://www.thelocal.ch/ for reproducing the following article.
    Ex-UBS trader beats US market manipulation charge
    UBS’s US headquarters in Stamford, Connecticut. Photo: AFP
    Former UBS precious metals trader Andre Flotron was acquitted on Wednesday of market manipulation, a development that could spell trouble for similar cases against other Wall Street traders.
    Authorities arrested Flotron late last year on charges he engaged in a Wall Street practice called “spoofing,” which involves placing and then immediately aborting trades to move prices.

    Read also: Bullish UBS posts strong first quarter results

    The acquittal follows January’s $46.6 million settlement with UBS, Deutsche Bank and HSBC over allegations traders at the banks worked to manipulate futures markets in precious metals between 2008 and early 2014.

    Before this case, only three other people had ever been charged with “spoofing,” according to the Justice Department, a practice banned under the 2010 Dodd-Frank Wall Street reform legislation.

    Federal prosecutors in January unveiled charges against Flotron, a Swiss national, along with six other traders and a technology consultant allegedly involved in the manipulation. They were based in New York, Switzerland, Britain, Australia and the United Arab Emirates.

    Prosecutors said the conduct was a systemic threat to markets, creating the risk of “eroding confidence” and putting honest players at a disadvantage.

    Government witnesses included Flotron’s former trainee, Mike Chan, who reportedly testified that he had learned to spoof at Flotron’s side.

    But a federal jury in New Haven, Connecticut deliberated only a short time before unanimously acquitting Flotron. He still faces a civil action by the Commodity Futures Trading Commission, which regulates futures markets.

    David Liew, a former Deutsche Bank trader, pleaded guilty in June and has since cooperated with investigators.

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: SWISS STOCK MARKET OPENS DOWN AFTER WALL STREET CHAOS
    Newport legacy wealth management Seoul Korea thanks “The Local” https://www.thelocal.ch/ for reproducing the following article.

    Swiss stock market opens down after Wall Street chaos
    A trader in New York on Monday. Photo: Bryan R. Smith / AFP
    The Swiss Market Index (SMI) stood at 8,771.90 points or 3.6 percent down shortly after the opening of the day’s trading on Tuesday.
    At one point the index was down as much as 4.3 percent. However, the index then began to rally to be down 2.36% to 8,886 points at 9.25am local time.

    This is the first time the SMI has been below 9,000 points since September 2017, with the biggest losers early on Tuesday being banks. Credit Suisse shares were 5.2 percent lower while UBS stocks had tumbled 4.5 percent.

    The falls on the Swiss index, which includes the 20 largest companies in the country, come a day after the Down Jones Industrial Average suffered its worst points fall in history, shedding 4.6 percent on Monday on the back of investor fears of rising interest rates.

    The sharp downturn in the United States wiped out all market gains seen in 2018 to date while Asian markets also took a hit last night.

    Monday’s chaos on Wall Street spelled an abrupt end to the buzzing mood on economic markets since Donald Trump’s arrival in Washington – a phenomenon described by the White House as the “Trump Bump”.

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: THE END OF THE BANKING BOOM WILL AFFECT YOUR RETIREMENT
    Newport legacy wealth management seoul korea thanks “ROD MYER” of THE NEW DAILY for reproducing the following article.
    Bank profits.
    The end of easy payouts from the big banks will be felt in surprising ways. Photo: Getty
    The long boom in Australian banking is coming to an end as investment bank UBS marks down the four major banks to either a hold or a sell, with new regulations likely to impinge on the banks’ business model.

    UBS analyst Jonathan Mott has reviewed all the big four in recent months. This week he recommended to his clients that they sell the National Australia Bank, in part because of the bank’s radical decision to slash its workforce.

    “We remain concerned that its restructuring (including 6000 gross redundancies – 18 per cent of headcount) is likely to be disruptive at a time when the revenue environment is challenging and the regulatory environment is hostile,” Mr Mott and fellow analyst Rachel Bentvelzen said in a report.

    They were also unimpressed by Westpac and the ANZ in recent months, predicting no share price growth. When the Commonwealth Bank reported a 1.2 per cent rise in half-yearly profit to $4.9 billion this week, UBS was underwhelmed with the result and maintained a “neutral” recommendation.

    “Higher credit losses in institutional banking are inevitable given the very low base, but once again brings into question why CBA has been lending internationally,” the analysts wrote.

    Banks have been one of two great drivers in the Australian share market in recent years, the other being resources. Together they account for about 45 per cent of the total market, with financials at 29.6 per cent and resources 15.7 per cent.

    While resources have been volatile, gaining only 0.7 per cent in that time as a result of the major smashing they received before China recently regained its minerals appetite, financials have been a reliable market driver, as the above chart shows.

    But financials look like losing that position with the big banks “at a fundamental turning point”, said Martin North, principal of Digital Finance Analytics.

    Bank share prices have been driven by the housing boom which has lost its steam, particularly in Sydney and in inner urban apartments, the bank tax and the upcoming Hayne royal commission, but Mr North said some other factors are changing the landscape.

    “The banking sector is increasingly open to disruption through changes like open banking and positive data sharing foreshadowed by Treasury this week,” he said.

    That means banks will soon be forced to provide transaction and product data to customers, who will then be able to share it around to get a better deal. That will break down the competitive advantage of the big four’s huge customer base and give a leg up to new competitors – such as ‘neobanks’.

    (A ‘neobank’ is a bank that operates entirely online, and markets itself as using the latest banking technology.)

    When the big banks are hit by disruption it’s not only borrowers who will feel the effects through cheaper interest rates. Their shareholders, who include the major Australian superannuation funds who have 25 per cent of their assets invested in Australian shares, will also be faced with lower returns.

    To replace the easy money from banks, “investors would have to look elsewhere for returns”, independent economist Saul Eslake said. “That could be hard as the Australian market does not have many companies in the new and emerging markets segments like technology and biotech.”

    That means it’s hard to get exposure to ‘unicorns’, the stellar performers like Apple and Google that have built Silicon Valley fortunes.

    “Even if you can find growth it would be difficult to find the high dividend yields the banks have been paying which would make it hard for retirees to keep up income levels.”

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: INCLUSIVE GROWTH AND JOB CREATION IN EGYPT
    http://www.newportlegacypress.com/inclusive-growth-and-job-creation-in-egypt/

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: GOLD MARKET BREACHES ‘COVERED UP’

    Newport legacy wealth management Seoul Korea thanks Andy Verity and bbc.com for reproducing the following article.

    Newport legacy Seoul Korea broadly agrees with the following.

    Dubai’s biggest gold refiner committed serious breaches of the rules designed to stop gold mined in conflict zones from entering the global supply chain, a whistleblower has revealed.

    Amjad Rihan led an Ernst & Young team that audited Kaloti and found it was failing to carry out the proper checks.

    But after he told the Dubai regulator, it changed its audit procedures. He said that allowed details of the most serious findings to be covered up, with Ernst & Young turning a blind eye.

    The regulator, Ernst & Young and Kaloti all say they acted properly.

    Mr Rihan told BBC Newsnight: “The risk of conflict gold entering Dubai and entering the global supply chain is extremely high.”

    The audit team, which visited Kaloti last year, alerted the Dubai Multi Commodities Centre (DMCC) and also urged superiors at Ernst & Young to notify other regulators and the gold-buying public.

    Global gold hub
    In May the DMCC’s guidance required the audit team’s initial findings to be made public but by November that requirement had disappeared.

    Angry with the regulator and his firm, Mr Rihan decided to resign and blow the whistle, taking his story to the campaigning group Global Witness, which passed key documents to Newsnight. His disclosures have also been reported by the Guardian and Al-Jazeera.

    Media captionAmjad Rihan tells BBC Newsnight why he felt he had to resign
    “I wouldn’t be able to live with a decision like that. I wouldn’t be able to come back home at the end of the day and look at my children in the eyes and tell them I’m proud of myself. I will never feel at peace with myself,” he said.

    The audit found Kaloti had breached a number of international rules for the responsible sourcing of gold, including:

    Paying tens millions of dollars in cash without proper documentation – a total of $5.2bn (£3.1bn) – or 40% of its business
    Importing more than four tonnes of gold-painted silver that arrived in Dubai declared as gold – a practice Kaloti described as “normal”
    Dealing with a supplier that had been linked to conflict zones in eastern Congo
    Conflict-free gold is described as gold that has not caused, supported or benefited unlawful armed conflict during its production.

    Dubai is an important global gold hub, with more than one-fifth of the world’s trade in physical gold taking place there.

    As well as being used for jewellery or gold bars, about 300 tonnes of gold a year is used for components in electronic devices, such as computer leads and smartphones.

    ‘Choke point’
    Dubai has been named in reports by Global Witness and the United Nations as a big destination for conflict gold. So the DMCC has adopted the international standards designed to show its gold traders and refiners are sourcing gold responsibly.

    Conflict minerals
    gold barImage copyrightREUTERS
    • Conflict minerals are minerals mined in conditions of armed conflict and human rights abuses• Armed groups earn hundreds of millions of dollars every year by trading conflict minerals. These minerals can be found in all our electronic devices, from mobile phones to gaming systems• A law passed in 2010 gave companies a May 2014 deadline for reporting the source of its raw materials• In January computing company Intel announced that it would no longer use conflict minerals in its microprocessors• US technology giant Apple began publicising which of its suppliers may be sourcing minerals from conflict zones in February• Apple’s first published list detailed 104 suppliers that were unverified for compliance with ethical guidelines

    Ernst & Young’s team in Dubai was engaged to carry out an audit of Kaloti against two standards – one set by DMCC and one set by the London Bullion Markets Association (LBMA), the standard gold sellers have to meet to sell on the London market.

    “Refiners – those who melt the gold down into bars or other forms – are the choke point in the supply chain,” Annie Dunnebacke, from Global Witness, said.

    “They must carry out checks all the way… back to the mine to find out what the conditions of extraction were, whether the gold has funded conflict, and what’s happened along the way.”

    Mr Rihan said his audit team made “severe and disturbing findings” at Kaloti but he discovered the DMCC was far from keen on publicly shaming Kaloti.

    ‘High risk’
    Mr Rihan said: “We told them about the severity of our findings as well as our final conclusion which would state that the risk of conflict minerals entering Dubai is extremely high.

    “The Dubai-based regulator was not happy about that, and when they realised that we will not alter our findings, they went ahead and they changed their own guidelines in such a way that our findings and our final conclusions are not made public.”

    The DMCC denies changing its rules in order to keep the detail of the damaging findings out of public view. It says the rule changes were based on a consultant’s advice, to bring itself into line with international standards like those required to sell on the London bullion market.

    Concerned that his firm was letting a cover-up take place, Mr Rihan wrote to Ernst & Young’s head of Europe, Middle East and Africa, Mark Otty, urging him to notify the UK regulator of the findings. He copied it to the firm’s global chairman and chief executive, Mark Weinberger.

    Ernst & Young took the view that it did not need to notify the UK-based regulator.

    Workers up a mountain in the DR CongoImage copyrightGETTY IMAGES
    Image captionConflict-ravaged DR Congo has provided large amounts of gold for the global chain
    Ernst & Young said the firm was not bound by the UK regulator’s rules to notify the LBMA of its findings and claimed it would be a breach of confidentiality to do so.

    ‘Goalposts moved’
    Newsnight has seen confidential documents that show the audit team’s findings were initially accepted by the refiner, Kaloti, which privately acknowledged the most serious category of rule breach.

    But in November, after what Mr Rihan described as a move of the “auditing goalposts”, Kaloti was able to declare itself “fully compliant”. And Ernst & Young publicly endorsed that as a “fair view”.

    Gold – key facts
    Gold - symbol, atomic number and weightImage copyrightTHINKSTOCK
    Symbol: Au (from Latin aurum)
    Atomic number: 79
    Weight: 196.97
    One of the “noble” metals that do not oxidise under ordinary conditions
    Used in jewellery, electronics, aerospace and medicine
    Most gold in the earth’s crust is thought to derive from meteors
    Biggest producers: China, Australia, US, Russia
    US Geological Survey: Gold

    Annie Dunnebacke, from Global Witness says: “Ernst & Young’s actions are not illegal but they raise questions about the firm’s ethical commitments.”

    In a statement, DMCC said it “utterly rejects any suggestion that it has acted in any way improperly in the application of responsible sourcing guidelines for gold and the review process for member refineries”.

    It added: “We have never concealed instances of non-compliance or protocol breaches, nor sought to influence [Ernst & Young] or any independent reviewer in carrying out their duties in the review process.

    “We have also never altered, amended or diluted our responsible sourcing guidelines or review protocol to favour any member refinery or otherwise interfered with the review process.”

    Kaloti said any allegations relating to its non-compliance in the gold trade business were “without merit”. It said it was proud to have led the “transparency drive” in Dubai’s physical gold market.

    “Kaloti has followed and adhered at all stages to the requirements of the audit and the DMCC review protocol and remains fully compliant,” it added.

    Ernst & Young Dubai said it “refutes entirely the suggestion that we did anything but highly professional work in relation to our compliance engagement with Kaloti.”

    It added: “The instances of non-compliance we found were fully reported by EY Dubai to the client and separately to the regulator.

    “EY Dubai took the views of our former partner very seriously… consulting with internal and external experts, who supported the actions we took.

    “We firmly believe… we have played an important role in achieving improvements in the client’s supply chain controls.”

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: POWELL’S ROSY OUTLOOK INVITES FED TO WEIGH FOUR 2018 RATE HIKES

    NEWPORT LEGACY WEALTH MANAGEMENT SEOUL KOREA THANKS JEROME POWELL AND THE AUTHORS OF THIS ARTICLE CRAIG TORRES AND CHRISTOPHER CONDON AND BLOOMBERG FOR REPRODUCING THE FOLLOWING ARTICLE.

    NEWPORT LEGACY SEOUL KOREA BROADLY AGREES WITH THE FOLLOWING.

    Jerome Powell opened the door to the Federal Reserve raising U.S. interest rates four times this year as he acknowledged stronger economic growth may prompt policy makers to rethink their plan for three hikes.

    “My personal outlook for the economy has strengthened since December,” the Fed chairman said Tuesday in response to a question about what would cause the central bank to step up the pace of policy tightening. He then listed four events that are causing him to revise up his outlook.

    Jerome Powell

    Photographer: Andrew Harrer/Bloomberg

    “We’ve seen continuing strength in the labor market,” Powell told the House Financial Services Committee in his first hearing as Fed chief. “We’ve seen some data that will in my case add some confidence to my view that inflation is moving up to target. We’ve also seen continued strength around the globe, and we’ve seen fiscal policy become more stimulative.”

    Powell is taking over the Fed at a time when the world’s largest economy may be shifting gear to faster growth and declining unemployment, though inflation remains below the central bank’s 2 percent goal. Adding to the momentum are tax cuts and spending increases agreed to by Republican lawmakers and signed by President Donald Trump.

    Economists said the signal was clear. The economic outlook is improving, and the chairman used the testimony to invite policy makers to reassess their December forecast for three hikes this year.

    ‘Clear Signal’
    “It was very, very clear signal that they are going to do a little bit more hiking this year than was in their dots in December,” said Seth Carpenter, a former senior Fed adviser who is now chief U.S. economist at UBS Securities. “The committee is going to have to come up with a credible argument that refutes the logic he laid out” for stronger growth and possibly a faster pace of tightening.

    Powell’s remarks caused yields on U.S. 10-year notes to jump to their highest levels of the day as they touched 2.92 percent after closing at 2.86 percent Monday. Stocks slipped into losses, with the S&P 500 Index down 0.9 percent at 3:39 p.m. in New York.

    Fed officials will submit fresh estimates for the economy and the number of rate increases warranted this year at their upcoming meeting on March 20-21. When pressed on how such an improving assessment would affect the path of interest rates, Powell said he wouldn’t “want to prejudge” the results of that exercise.

    Even though his written testimony echoed the “roughly balanced” language of the Fed’s January statement, Powell’s answers to questions signaled he’s gone a step beyond that.

    “For a long time, there was slack in the labor market, and that argued for continuing to support lower unemployment. We’ve reached the point where the risks are really two-sided now,” Powell said.

    If the economy overheats, “we’ll have to raise rates faster, and that raises the chances of a recession, and recessions tend to hit vulnerable populations the most,” he added. “We’re trying to balance the risk of getting inflation up to 2 percent with the risk of the economy overheating.”

    Investors marked up the probability of a Fed rate hike in the fourth quarter to about 50 percent following Powell’s remarks. Odds of increases in the second and third quarters ticked up to about 80 percent and 70 percent, respectively, while the chances of a boost when the Fed next meets in March remained near 100 percent.

    Read more: These charts will help you understand Tuesday’s economic data

    The Fed chief’s opening comments were also positive on the outlook for growth. He said “some of the headwinds the U.S. economy faced in previous years have turned into tailwinds.”

    “There has been a huge reaction in the rates market,” said Priya Misra, head of global rates strategy at TD Securities. “He has more confidence in the outlook for growth and inflation than he did in December, but I think the market over-reacted.”

    For the Fed to go faster than three hikes in 2018, she added, there has to be evidence that inflation is moving up by at least mid-year. The Fed’s preferred inflation benchmark rose 1.7 percent in 2017 and has been under its 2 percent goal for most of the last 5 years.

    Powell said monetary policy will try to strike a balance between “avoiding an overheated economy” and bringing inflation back to target on a sustained basis.

    The recent correction in the stock market and rising rates on U.S. government debt shouldn’t hamper growth, he said.

    “We do not see these developments as weighing heavily on the outlook for economic activity, the labor market, and inflation,’’ Powell said.

    He repeated the FOMC’s January message, saying “further gradual increases’’ in the Fed’s policy rate “will best promote’’ the attainment of the central bank’s objectives of maximum employment and stable prices.

    Powell said that the lag in wages during the expansion was due to low gains in output per hour, or productivity, though a new wave of investment spending “should support higher productivity growth in time.’’
    “Wages should increase at a faster pace as well,’’ he said, adding that the FOMC continued to view the shortfall in inflation last year “as likely reflecting transitory influences that we do not expect will repeat.’’

    — With assistance by Matthew Boesler, and Shelly Hagan

  •  Katie Swift

    NEWPORT LEGACY SEOUL KOREA: AUSSIE MARKET CONTINUES TO SURGE

    NEWPORT LEGACY WEALTH MANAGEMENT SEOUL KOREA THANKS Virginia Trioli AND ABC.NET FOR REPRODUCING THE FOLLOWING ARTICLE.

    NEWPORT LEGACY SEOUL KOREA BROADLY AGREES WITH THE FOLLOWING.

    Virginia Trioli discusses the strong performance of the markets this week with economics correspondent Stephen Long.

    VIRGINIA TRIOLI: Another day, another record high on the stockmarket. Australia’s key share index gained more than 5 per cent this week, it’s now up more than 1,000 points since the height of the credit crunch in mid August, and it’s a similar story in the US.

    To discuss this, I’m joined by economics correspondent Stephen Long.

    Stephen, what is going on with this market? Last week weren’t we talking about a possibility of a recession in the US?

    STEPHEN LONG: Yes, and then Ben Bernanke came along and cut rates by half a per cent. And now, bad news is good news, Virginia, because it means there’ll be further rate cuts. So when there were weak housing figures in the US, had the biggest slump in new home starts in many years, the markets rallied. More rates cuts on the way. Good news is good news because it means the economy is good, but bad news is good news because it means more rates cuts. The markets are happy. Rally, rally, rally. But if you thing about it logically, if the Fed is happy to cut rates in the US because of a weakening economy, then it stands to reason that will hit corporate profits at some stage, perhaps tonight. That’s got to dawn on investors. So I’m not sure how long it can go on.

    VIRGINIA TRIOLI: What’s driving the local market here? What’s driving that in particular?

    STEPHEN LONG: The commodities boom. We’re seeing soaring prices for metals, for oil. And that is partly because of the Fed rate cuts and what they’ve done to the US dollar. The US dollar has fallen precipitously in value and that’s pushed up commodities worldwide. As a consequence, you’re seeing Australia rally, the big mining companies, BHP Billiton, Rio Tinto at record or near-record highs, big national income coming in. So that’s why we’ve got our rally. It’s perhaps more rational to some extent than the US rally, but there’s also just this big bubble of money around the world so it’s got to go somewhere.

    Emerging markets have rallied even more strongly than here and Asian stocks are booming as well. You know, there’s just so much money sloshing around the globe. If people get some confidence back, where does it go? It’s not going to go into housing anymore after the mortgage meltdown in the US. Is equities the next bubble?

    VIRGINIA TRIOLI: But apart from the heat in the market, the Reserve Bank is quite positive about prospects here, isn’t it?

    STEPHEN LONG: Very much so. I mean, there were two reports or there was a report and a speech by the Reserve Bank this week and they’re the anti Hanrahans. They’re saying we won’t all be ruined. But there were frightening statistics nonetheless in one of the speeches by the deputy governor of the Reserve Bank, Ric Battellino. He observed in passing that the credit growth we’ve seen in the past three decades has no precedent in 150 years of figures, and the only time that the growth in credit has come close was in 1880 and 1920. Now those who know their history know that in 1890 Australia had the worst crash it’s ever experienced. In the 1930s after that big credit run up in the ’20s, well we know what happened there, so I’m not entirely reassured, but let’s hope they’re right and we won’t all be ruined.

    VIRGINIA TRIOLI: That’s right and we’re not just looking at another bubble. Thank you, Stephen.

    STEPHEN LONG: You’re welcome.