"Fearless Girl" to relocate to outside NYSE | TPP wants to start trade pact without waiting for US | US Treasury may use emergency powers on Chinese investments
20 April 2018
CFA Institute: Financial NewsBrief
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Deutsche Bank's pricey error raises risk questions
Deutsche Bank erroneously paid Eurex Clearing a daily collateral adjustment worth reportedly €28 billion about a week before Easter, but the mistake was caught before causing financial harm. The error raises questions about the bank's risk controls, but spokesman Charlie Olivier says officials "have rigorously reviewed the reasons why this error occurred and taken steps to prevent its recurrence."
Bloomberg (free registration) (20 Apr.),  Financial Times (subscription required) (19 Apr.) 
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"Fearless Girl" to relocate to outside NYSE
"Fearless Girl" to relocate to outside NYSE
(Eduardo Munoz Alvarez/AFP/Getty Images)
The "Fearless Girl" statue, which stands opposite the "Charging Bull" statue in New York City, will move to a space outside the New York Stock Exchange because its location poses a safety risk, Mayor Bill de Blasio says. "Charging Bull" also might relocate, but no timeline or location has been set, the mayor's office says.
The New York Times (tiered subscription model) (19 Apr.),  CNNMoney (19 Apr.),  Financial News (UK) (tiered subscription model) (20 Apr.) 
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TPP wants to start trade pact without waiting for US
The 11 countries involved in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership want to continue with the trade pact as is, said the executive director of the Asia-Pacific Economic Cooperation Secretariat, Alan Bollard. US re-entry is possible "in some years," but the renegotiations likely required would slow progress made by the 11 countries, Bollard said.
Nikkei Asian Review (Japan) (tiered subscription model) (20 Apr.) 
US Treasury may use emergency powers on Chinese investments
The US Treasury Department may restrict Chinese investments by invoking use of the International Emergency Economic Powers Act. One goal of the move would be to pressure China to stop requiring foreign companies to partner with local firms on technology transfers.
Reuters (20 Apr.) 
Japan's finance chief cautions against G-20 protectionism
Countries will not benefit from "inward-looking policies based on protectionism," said Taro Aso, Japan's finance minister. Global imbalances would be better remedied by a multilateral framework, rather than a bilateral one, Aso told Group of 20 finance leaders.
Reuters (19 Apr.) 
Market Activity
Asian-Pacific markets mirror Wall Street drop
Asian-Pacific stocks followed a decline on Wall Street Friday. Japan's Nikkei 225 dropped 0.1%; Hong Kong's Hang Seng Index fell 0.9%; Australia's S&P/ASX 200 fell 0.2%; China's Shanghai Composite slid 1.5%; South Korea's Kospi declined 0.4%; and India's Sensex was down 0.2%.
CNBC (20 Apr.),  The Economic Times (India) (20 Apr.) 
Shire rejects Takeda's 3rd takeover proposal
Irish drugmaker Shire has rejected a $60 billion bid from Japan's Takeda Pharmaceutical. Shire says the offer, Takeda's third, undervalues the company, but the firms are still in talks.
Bloomberg (free registration) (20 Apr.),  Financial News (UK) (tiered subscription model) (19 Apr.) 
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Pessimism gives banking ETF huge one-day loss
State Street's Financial Select Sector SPDR exchange-traded fund has experienced the biggest single-day loss this year, despite strong earnings reports from major US banks. Many investors are skeptical banks can continue the positive performance, says Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
Bloomberg (free registration) (19 Apr.) 
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Economics
Carney: Rate hike likely but probably not in May
Carney: Rate hike likely but probably not in May
Carney (WPA Pool/Getty Images)
The UK should see multiple interest-rate increases in the next few years, including one this year, but probably not as soon as May, says Bank of England Governor Mark Carney. Economic data are mixed, Carney says, with unemployment at a 42-year low but inflation and retail sales disappointing.
Reuters (19 Apr.),  BBC (19 Apr.),  The Telegraph (London) (tiered subscription model) (19 Apr.) 
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Fed researchers: Tariffs could harm US employment
Steel and aluminum tariffs are more likely to reduce US employment than to increase it, Federal Reserve Bank of New York researchers say. Employment in steel-intensive industries could decline as exporters dependent on steel raise prices or lower profit margins, the researchers say.
Bloomberg (free registration) (19 Apr.) 
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Quarles: 30-year fixed-rate mortgage may not need government guarantee
The 30-year fixed-rate mortgage probably does not need a government guarantee to survive, Randal Quarles, Federal Reserve vice chairman for supervision, said at a Senate banking committee hearing. US Sen. Heidi Heitkamp, however, said, "There are a number of people in smaller or midsized institutions who believe it would be difficult to take a 30-year interest-rate risk without some kind of assurance they could offset that risk."
MarketWatch (19 Apr.) 
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Fed's Brainard: Not a good time to revisit big-bank rules
Fed's Brainard: Not a good time to revisit big-bank rules
Brainard (Alex Wong/Getty Images)
Federal Reserve Governor Lael Brainard explained her vote against a proposal to change capital or liquidity rules for big banks, saying the largest firms "have the right kind and amount of liquidity." Vulnerabilities in asset valuation and business leverage show signs of "financial imbalances," Brainard said.
Reuters (19 Apr.),  Bloomberg (free registration) (19 Apr.),  The Wall Street Journal (tiered subscription model) (19 Apr.) 
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Geopolitical/Regulatory
IMF's Lagarde: Trade friction hits business confidence
IMF's Lagarde: Trade friction hits business confidence
Lagarde (Chip Somodevilla/Getty Images)
Trade tension could reduce investment as businesses experience an "erosion of confidence," says Christine Lagarde, managing director of the International Monetary Fund. More "clouds are accumulating on the horizon" of the global economy, though short-term prospects are promising, Lagarde says.
Bloomberg (free registration) (19 Apr.),  Reuters (19 Apr.) 
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UK-US working group to focus on post-Brexit stability
The UK and the US plan to form the Financial Regulatory Working Group to ensure financial stability and market efficiency after Brexit. The group plans to meet at least semiannually.
Reuters (19 Apr.) 
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Chinese R&D centers of low importance to US firms
The majority of US firms say establishing a Chinese research and development center is of minimal importance compared with other regions, according to a survey by the American Chamber of Commerce in Shanghai. Less than 4% of businesses say China is their most important R&D center, citing factors including poor protection of intellectual property rights.
South China Morning Post (Hong Kong) (19 Apr.) 
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IMF wants jurisdictions to cooperate on cryptocurrency rules
The International Monetary Fund urges regulators and policymakers in different jurisdictions to use a "nimble, innovative and cooperative approach" to establish cryptocurrency rules. "National authorities and international standard setters are encouraged to intensify cooperation on the monitoring of crypto-assets and on the consistency of the regulatory approach," an IMF report states.
MLex (subscription required) (19 Apr.) 
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Cryptocurrency backers seek to slow US regulation
Silicon Valley is lobbying for exemptions from Securities and Exchange Commission and other regulatory oversight until the cryptocurrency industry matures because of fears US regulation would hamper development. "You can't just start writing laws and regulations today and expect to get it right," said Chamber of Digital Commerce President Perianne Boring.
The Wall Street Journal (tiered subscription model) (19 Apr.) 
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Financial Products
Direxion to debut 3-times leveraged ETF
Direxion plans to launch an exchange-traded fund that uses leverage to give three times the performance of an index focused on artificial intelligence and robotics. This ETF is advised for investors familiar with daily leveraged and inverse investment, Direxion says.
Bloomberg (free registration) (19 Apr.) 
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