New Bank of England Governor (Bailey) Appointed

Andrew Bailey, chief executive of the FCA, has been appointed as the new governor of the Bank of England. The move is not without controversy, with the FCA being criticised over its supervision of Neil Woodford (formerly fund manager at Invesco Perpetual, since rebranded to Invesco)'s flagship fund which was suspended in June 2019 and eventually closed.

Saudi Aramco IPO Goes Live Raising $25.6bn

The shares were priced at 32 Saudi Riyals or 8.53 USD. The valuation is $1.7 trillion versus $2 trillion target. This makes it more valuable than Apple, valued at $1.17 trillion.

US-China Trade War Hits Hardware Vendors' Bottom Line - Cisco, HP Enterprise and Dell

CISCO CEO, Los Gatos resident and Maths and Computing graduate Chuck Robbins (who succeeded John Chambers as CEO in July 2015), has blamed the macroeconomic climate for poor results. HPE made similar comments.

Saudi Aramco Plans Tadawul Listing

Saudi Arabian Oil Company is planning to list on Tadawul.

The TASI (Tadawul All Share Index) denominated in Saudi Riyal (where one SAR is around 27 cents) is down around 2%.

Foreign listing plans have been put on the shelf for now. Oil in Saudi Arabia is relatively cheap to extract being close to the surface.

Planned Float on NYSE For "Innovative and Agile" Virgin Galactic

Sir Richard Branson announced this move would "open space to more investors" and in doing so "thousands of new astronauts". Virgin Galactic is already merged with public firm Social Capital Hedosophia (which has shares and warrants on the NYSE and invests in "innovative and agile technology companies"), making its listing process simpler. Hedosophia shares jumped 11% in anticipation.

VG was founded in 2004 and has so far invested more than $1bn in its development program. Flights to space will be charged at $250,000 a ticket.

Operationally, VG conducts its manufacturing, design and test from purpose built facilities in California and New Mexico.

Spaceport America New Mexico, the world's first purpose-built commercial spaceport, on an 18,000 acre site, is the launchpad for its planned operations (also used by Boeing and UP Aerospace).

Blackstone Real Estate Buys Out the Bellagio

BREIT (Blackstone Real Estate Investment Trust) has formed a joint venture to buy out Bellagio Real Estate for $4.25 billion. The joint venture owns the property and receives rent payments. MGM Resorts will lease back the property and be responsible for all capital expenditures. Blackstone President and COO, Jon Gray, remarked his team were "big believers in MGM Resorts and Las Vegas". JP Morgan was financial advisor to MGM Resorts. Citigroup and Morgan Stanley were finanical advisors to BREIT.

UK's Conservative Whip Amber Rudd Resigns

Amber Rudd has resigned the Conservative whip in response to the sacking of 21 Tory MPs in the run up to Britain's advertised EU exit date of 31 October.

She was appointed as Secretary of State for Work and Pensions by Prime Minister Theresa May on 16 November 2018 and reappointed by Boris Johnson in July 2019.

A whip ensures "party discipline" in a legislature. Australia, New Zealand, India and Canada have all embraced the whip system inherited from British rule.

UBS Plans Banking Revamp

UBS plans a banking revamp, putting Ros Stephenson and Javier Oficialdegui in charge of investment banking and placing both head of Equities, Jason Barron, and head of foreign exchange, rates and currencies, George Athanasopolous, in charge of combined trading operations.

Indonesia Follows Brazil in Move to Change Capital City

Indonesia is planning a move of its capital from Jakarta to East Kalimantan on the island of Borneo. Kalimantan is one of the original homes of the orangutan. $32bn is the estimated cost of the move.

China Retorts US Tariffs As Yield Curve Inverts

China will place additional tariffs of between 5% to 10% on US goods starting September 1, 2019, according to the Finance Ministry. US automobiles and parts will also be specifically targeted. Soybeans, seafood and whisky will be similarly targeted. This has led to US farmers storing soybean instead of selling them as prices are hurt by tariffs.  In the US bond market, the yield curve has inverted. This means 10 year Treasuries are now below the 2 year Treasury rate (a historic predictor of a coming recession). The US Chamber of Commerce is urging parties to get "back to the table". The S&P 500 has dropped around 2.6%.

Goldman's Bond Sale Fees of $600m from Questionable 1MDB Transaction Raises Questions

Goldman Sachs, having raised three large bond offerings for 1Malaysia Development Berhad. the country's sovereign wealth fund, is now facing the prosecution of 17 current and former employees, who were directors of three Goldman's subsidiaries at the time.

The bank bagged $600m in fees. The scandal also hit Malaysia's former Prime Minister Najib Razak  who has been hit with corruption charges. Mubadala Investment Company has suspended dealings with Goldman as a result of the investigations.

1MDB is now insolvent. It started out as a fund to spur development in Malaysia's Terengganu State, whose main economic centre is Kuala Terengganu.

AMD Second Generation Epyc Attacks Intel Xeon

AMD unleashed its new second generation Epyc chip, aimed at Intel Xeon's data center processing market share (for cloud service providers) under the tagline "New Leader. New Rules". AMD are claiming 1.8x-2x performance advantage over Xeon. "Big Data Analytics" is another application area that Epyc is looking to grab. Epyc uses the AMD Infinity Architecture under the hood.

Who were the Best Fund Promoters in H1 2019 according to Lipper?

According to Lipper (an investment data firm founded in 1973 now owned by Thomson Reuters/Refintiv), the "best" fund promoter in H1 2019 was AXA.

AXA boasted net sales of 28.6 billion euro.

Blackrock came in second place with 23.1 billion euro, with PIMCO third at 23 billion euro.

Vanguard, who espouse the "four principles", came in at 9.9bn euros, less than 50% of PIMCOs sales.

London takes on Geneva as Schroders Buys Majority Stake in Impact Investing Manager Blue Orchard

Schroders (based in London) has bought a majority stake in impact investing specialist Blue Orchard ("where financial returns meet social and environmental impact"), based in Geneva, which manages $3.5bn in assets, in credit, PE and sustainable infrastructure, for an undisclosed sum. Robeco SAM is another player in the once-niche impact investing space.

Blue Orchard was founded by two bankers who are no longer with the firm, Jean-Philippe de Schrevel and Melchior de Muralt, a Swiss private banker. Chairman Peter Fanconi and CEO Patrick Scheurle will stay with Blue Orchard post Schroder-acquisition.

Facebook Lands on $5bn Settlement with FTC

Facebook's stock dipped in June when the market learned the Federal Trade Commission was investigating the company. This is linked to deceiving users that they could control the privacy of their information. "Facebook undermined consumers' choices" said Joe Simons, FTC Chairman.

Amazon Enters EdTech Market with Indian Test Prep App

The app which is in beta targets the IIT JEE or Joint Entrance Examination which is a prerequisite for entering the Indian Institutes of Technology (and is also used by other institutions such as Indian Institute to Science) has been launched by Amazon.

How are Markets doing YTD 2019 (as of 13 July 2019)?

S&P 500 is up 500 points from the start of the year (+20%) [2510, 3013]
SX5E is also up 500 points from the start of they year, though lower percentage gain (+17%) [2993,3497].
DAX which closely follows SX5E is up 1743 points, again a lower percentage gain (+16%) [10580, 12323].
GSCI is up 15% but it was impacted by a late May sell off followed by recovery. [377,434].

Accenture Picks Ex "Legal Eagle" Julie Sweet as CEO, Incumbent CEO Supports with "Right Person" Comment

Accenture (NYSE:ACN)  has picked 51-year old Julie Sweet as CEO after serving on the company's management committee for almost a decade. She has headed Accenture's North America operations since 2015 She has said looking for diversified revenue growth will be a key priority for her. She has previously been a Partner for 10 years at Cravath, Swaine and Moore. "Julie is the right person", assented current interim CEO David Rowland who will step into the role of Executive Chair. Non-Executive Chair Marge Magner, speaking on behalf of the board, cited Julie's "ability to forge major client relationships", "leading with innovation" and "focus on delivering value to shareholders" as key strengths which will serve her well as CEO. She is a member of the TechNet Executive Council.

Under BladeLogic Founder Dev's Leadership, Mongo DB Stock is Up 200%, Market Cap 8.7bn

Mongo DB (NASDAQ:MDB) stock is up 200% year to date, from $52 to $157. Its current CEO, Dev Ittycheria, co-founded BladeLogic and sold the company to BMC for a whopping $900m. BladeLogic has since been re-branded to TrueSight.

Christian Sewing Presses "Restart" for Deutsche Bank, Casting off Equities, Capital Crunching Fixed Income and Shoving 7.4bn RWA into "Capital Release" Unit

Deutsche CEO Christian Sewing has stated "We are doing what is necessary to unleash our true potential...We are building on our strengths. This is a restart for Deutsche Bank".

Sewing replaced outgoing German-speaking British Chief Executive John Cryan on 8 April 2018. One year into the CEO role Sewing has unleashed a radical restructure of the Deutsche Bank.

New Board members effective 1 August 2019 will be ex-McKinsey consultant Christiana Riley, Bernd Leukert who is a member of the Supervisory Board of Bertelsmann SE and held various executive roles at SAP and Stefan Simon, a lawyer, bringing experience in corporate law, corporate governance and compensation oversight (he is also an honorary professor at the University of Cologne).

A major part of the restructuring will be exiting the Equities Sales and Trading business and reducing capital consumed by the other businesses especially Rates. A preliminary agreement has been struck with BNP Paribas to provide continuity of service for electronic equities clients with a view to moving technology and staff across in due time. Deutsche's electronic equities and prime brokerage is mainly US-based. Several hedge funds have pulled out of Deutsche's prime business following a series of fines.

As part of the "restart", 74 billion euros of risk-weighted assets will be moved into a Capital Release Unit (CRU) for wind-down. A new CET1 target ratio of 12.5% has been targeted along with a fully loaded leverage ratio of 5% from 2022. There will also be a reduction in headcount by 18,000 full time employees. 13 billion will be invested in technology in the next three years.

Bamberg-born Reinhard Ploss' Infineon to Acquire AMD-Alumni Formed Cypress Semiconductor for $10bn

This makes Infineon the top automotive IC supplier in the world.

Last year it bought Siltectra for 125m euro, a 2010-founded specialist in wafer treatment technologies.

Bamberg-born Reinhard Ploss is Chief Executive of Infineon, shares his birthplace of Conrad III of Germany, and studied Process Engineering at the Technical University of Munich.

Cypress Semiconductor has a range of products including NOR flash memories. Oshkosh, Wisconsin born T.J. Rodgers was a founder of Cypress Semiconductor along with other alumni from AMD.

Infineon has an interesting background. It was founded as recently as 1999 and was a spinoff of Siemens AG's semiconductor operations on the premise that public financing for the semiconductor business specifically was more practical than relying on Siemens' internal financial resources.

The subsidiary prior to spinoff was called Siemens Semiconductors.

Qualcomm Impacted by $272m EU Antitrust Fine

The fine is related to Qualcomm's historical pricing (from 2009 to 2011) of 3G modem chips and comes at the end of a four-year long investigation by the EU.

The fine was announced by the EU's Competition Commissioner Margrethe Vestager. She was previously a member of the Folketing (Danish Parliament) known as Folketinget in Danish ("people's thing") which governs Denmark, the Faroe Islands and Greenland.

Antitrust laws govern the distribution of economic power and are aimed to ensure fair competition.
Price fixing activities generally come under antitrust law.

Amazon Contributes to $575m Investment in Deliveroo

Amazon has invested heavily in Deliveroo, having scrapped its own online food delivery service. Deliveroo will use the money for international expansion. Its model is not to employ riders directly but pay them per delivery.

Avengers: Endgame Boosts Disney Share Price to $140

Disney's share price rose to $140 following news of the success of Avengers: Endgame, its latest release in the Marvel Cinematic Universe (MCU).

To date, the top 10 Marvel films have brought in  more than $1bn each on average, supporting Disney's decision to acquire Marvel in 2009 for $4bn. Marvel was founded in 1986 as a subsidiary of Cadence Industries (it was subsequently taken over several times, and was described as a "mini-Disney in terms of intellectual property" by Greensboro-born American businessman,  Ron Perelman, who won $1.5bn from Morgan Stanley in legal claims, a decision which was later reversed).

After Marvel, Disney later acquired Lucasfilm (2012) from founder George Lucas for $4bn (citing "substantial pent-up demand" for Star Wars movies, and 21st Century Fox (2019) (which owns in turn Star India, and majority owns Hulu, a low-cost streaming media subscription service and Fox Deportes, formerly Fox Sports en Espanol).

Disney Plus, a new streaming service, is also set to be launched late 2019, featuring the entire Star Wars series plus a range of Disney-owned content.

ABC Television alumnus Robert ("Bob") Iger has been CEO of Disney for over a decade, succeeding Michael Eisner in 2005, having been five years in the COO position.

Bob went to Ithaca College in New York (Tompkins County).

Bob earned a whopping $65m for being CEO in 2018. He also joined the Board of Directors of Apple in 2011 (chaired by American businessman and former CEO and later Chairman of Genentech, Arthur Levinson).

Bank of England Governorship Up for Grabs

With Mark Carney due to step down, the governorship for the Bank of England is up for grabs.

Names "in the frame" include Agustin Carsens, former Central Bank governor of Mexico who is now general manager of the BIS, and Raghuram Rajan, former Central Bank governor of India.

American economist Jason Furman, who has a PhD from Harvard and is currently a Professor at HKS and was Barack Obama's Chief Economic Adviser for eight years, has also been tipped as being in the race. He has also worked at the CEA (Council of Economic Advisers).

Other names include Andy Haldane, Chief Economist at the Bank of England, whose six-year term at the BoE ends on 11 June 2020. A founder of "Pro Bono Economics" and author of 4 books, he is also a Visiting Fellow at Nuffield College, Oxford. He has a Fellowship of the Academy of Social Sciences (FAcSS). He is also Chair of the UK government's Industrial Strategy Council.

UBS Posts Q1 2019 Results - 1.1bn USD Profit Despite Drop in IB Revenues

Huge drop in Investment Banking revenues but still more than a Billion Dollars in Quarterly Profit

UBS posted a 21% fall in wealth management and 64% drop in investment banking revenues for Q1 2019. "Profit" came in at 1.1bn USD (with PBT coming in at USD 1.5bn).

A Closer Look at UBS' Capital Ratios

13%  CET1 capital ratio. How do we interpret this 13% number? Basel III capital rules require all banks to maintain a minimum CET1 to RWA ratio of 4.5% by 2019. CET1 is a capital measure introduced in 2014 to protect the economy from financial crisis - the mandating of a minimum requirement ensures banks have a financial "cushion" to absorb unexpected losses. Thus UBS has almost three times the minimum requirement. CET1 stands for Common Equity Tier 1 which is a component of Tier 1 capital that consists mainly of common stock held by a bank or other financial institution.

A quick recap on the calculation -

CET1 Ratio = Common Equity Tier 1 Ratio = Common Equity Tier 1 Capital / Risk Weighted Assets

CET1 capital is at the bottom of a bank's capital structure implying in the event of a crisis, losses are first deducted from this tier. If the ratio falls below minimum level required by regulators, banks must build back that capital layer or risk being shut down or taken over. Dividend payments and employee bonuses may be restricted during this time.

Leverage -
3.8% CET1 leverage ratio
5.4% Tier 1 leverage ratio

"The UK Retail Trading Environment is Tough" - Monsoon Accessorize Spokesperson, As Company Mulls CVA

Monsoon Accessorize, owned by its founder Sri Lanka-born Peter Simon, who was inspired to start the company following a road trip, declared via a spokesman that "The UK retail trading environment is tough" and in a bid to reduce costs will continue to reduce its store portfolio. Deloitte has been hired to help the firm negotiate a CVA or company voluntary arrangement, a controversial insolvency procedure used by firms like Debenhams, New Look, Mothercare and Byron in recent years.

Revenues at Companies where UK Executive Pay is at Its Highest

Persimmon PLC, a FTSE 100 British company headquartered in York, UK, is the company with the highest executive pay, with ousted Chief Executive Jeff Fairburn earning £47.1m. He joined the company in 1989 and became CEO in 2013. Persimmon's former Chairman resigned in his role in awarding Jeff a £100m+ bonus. 2018 revenues at Persimmon were £3.7bn in 2018. Its current Group Chief Executive is Dave Jenkinson.

Eurex to Pilot PLP - Passive Liquidity Protection (aka Passive Order Protection) in June 2019

The Eurex will be trialling this feature in a pilot phase, which they have named PLP, in June 2019 for German and French equity options traded on Eurex T7 (this will be activated in the simulation environment in March 2019).

More broadly, exchanges and regulators have been trialling out passive order protection or passive liquidity protection, whereby orders resting in the system are not given priority execution.

The idea is to "level the playing field" between high frequency trading investors and constitutes a form of "latency protection".

EuroStoxx has gained around 300 points in 4 months from December 2018 to April 2019

The EuroStoxx has been on an almost straight line trajectory from end December 2018 to April 2019.  2937 on 29 December 2018 has lifted to 3351 on 1 April 2019 supporting the notion that "the trend is your friend". The gain is around 12%.

New variations on the EuroStoxx include the recently launched EuroStoxx 50 Low Carbon, part of the new ESG benchmark index futures from Eurex. Data sources used include CDP (Carbon Disclosure Project) and IIS-Ethix Climate Solutions. Regional variations include STOXX USA Low Carbon and STOXX Japan Low Carbon.

Turkish lira weakness prompts fall in EM currencies

The Turkish lira has lost 40% of its value over the last year.  With national elections approaching, the central bank prompted the overnight offshore swap rate above 1300pc to defend the lira.

Turkish banks and corporates have become overstretched on short-term lending, having exploited dollar liquidity to push the country's external liabilities $234bn. Of this, about $150bn is short-term debt required repayment or refinancing within 12 months.

Turkey's reserve cover, the ratio of short term debt to net reserves, is now around 500%, the weakest amongst emerging market countries, according to Capital Economics.

One possible response from banks is to shrink their balance sheets and sell off foreign currency assets. This could trigger a credit crunch.  CDS on Turkey have spiked 150bp to 454.

Despite the situation being contained in Turkey, traders have responded by trading out of Argentine peso, Brazilian real and South African rand as well.

£45m Gift for Big Data in Biology

The EBI (European Bioinformatics Institute) based in Cambridge, England, is getting £45m to expand its operations, in particular the Centre's data storage facility. This will be delivered via UKRI's Strategic Priorities Fund. The organization is based in Hinxton, South Cambridgeshire, at the Wellcome Genome Campus, for 25 years, which also hosts the Wellcome Sanger Institute.

GE Sells Biotech Business for $21bn to Danaher

The unit sold was part of GE's healthcare business and was slated for its own IPO later in the year. GE shares were 8% up in early trading.

The deal was positively received by analysts covering both companies.

Gabelli commented that it addresses the deleveraging challenges of GE, allowing it to focus on turning around the power business.

Others described it as "significant down payment" on $30bn of expected cash proceeds highlighted on 4Q. Janney's pointed to an uptick in DHR's organic growth rate going forward from 4% to 6%.

Danaher publishes a sustainability report yearly - the latest is on their website.

Bob Swan Edges in as CEO of Intel in Semi-Con Rat Race

Bob Swan becomes CEO of Intel after seven months as interim CEO. His previous experience includes 15 years at General Electric and later CEO of Foster City-based online grocery business Webvan (which went bust in 2001 and was folded into Amazon.com).

The Company Formerly Known as Statoil Expands into Electricity Trading

Equinor has bought Danske Commodities ("DC") for 459m EUR, making it a wholly owned subsidiary but not compromising the Danske name. DC CEO Henrik Lind heralded the deal as "an exciting new chapter for both companies".  DC achieved a 50% ROE in 2017.

World Bank Puts Global Growth from 2019 onwards at 2.9% per year

The World Bank revises its estimate down from 3% in its latest report on global growth. The risk of trade disputes escalating has been one explicit concern. As the Fed raises interest rates, the era of easy money is also at risk. Jim Yong Kim recently resigned as President and a successor search is under way.