Macron: UK can keep EU market access, with conditions | San Francisco Fed's Williams reportedly interviewed for vice chairman | ESMA considers crackdown on CFDs, binary options
19 January 2018
CFA Institute: Financial NewsBrief
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Top Stories
Hopes of averting US government shutdown fade
Hopes of averting US government shutdown fade
McConnell (Alex Wong/Getty Images)
The House has passed a stopgap measure to keep the US government open after Friday, but Democratic opposition seems likely to prevent passage in the Senate. Senate Majority Leader Mitch McConnell didn't appear to have enough votes when the Senate adjourned late Thursday.
CNN (19 Jan.),  The New York Times (free-article access for SmartBrief readers) (18 Jan.),  Politico (19 Jan.) 
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Macron: UK can keep EU market access, with conditions
Macron: UK can keep EU market access, with conditions
Macron and UK Prime Minister Theresa May (WPA Pool/Getty Images)
French President Emmanuel Macron said that if the UK wants its banks to retain free access to the European single market, Britain must contribute financially to the EU budget and submit to the authority of EU courts. The approach is commonly called the "Norway model" because that's Norway's relationship with the EU.
Bloomberg (free registration) (18 Jan.),  The Guardian (London) (19 Jan.),  Politico Pro (subscription required) (18 Jan.) 
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San Francisco Fed's Williams reportedly interviewed for vice chairman
John Williams, president of the Federal Reserve Bank of San Francisco, has been interviewed by the White House for the Fed vice chairmanship, a source says, though there is no indication he is a front-runner. The position requires Senate confirmation once the White House nominates someone.
Bloomberg (free registration) (18 Jan.),  The Wall Street Journal (tiered subscription model) (18 Jan.),  Financial Times (tiered subscription model) (18 Jan.) 
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ESMA considers crackdown on CFDs, binary options
The European Securities and Markets Authority has invited public comment on proposed restrictions to the sale of contracts for difference and binary options by spread-betting firms. The restrictions include limits on leverage and retail customer losses, as well as a standardized risk warning, for CFDs and a ban on selling binary options to retail customers.
Reuters (18 Jan.),  Financial Times (tiered subscription model) (18 Jan.),  Financial Times (tiered subscription model) (18 Jan.) 
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EU proposes more flexible, streamlined VAT system
The European Commission has proposed measures that would give EU states more freedom in setting rates for value-added tax and would make it easier for small and midsize companies to comply with VAT rules. Economic and Financial Services Commissioner Pierre Moscovici said the proposals would give countries authority to exempt some products and services from VAT.
The Brussels Times online (Belgium) (18 Jan.),  Politico Pro (subscription required) (18 Jan.) 
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MetLife no longer designated systemically important
MetLife is claiming a legal victory after the Trump administration has dropped an appeal to maintain the insurer's designation as a systemically important financial institution. Treasury Secretary Steven Mnuchin, who heads the Financial Stability Oversight Council, has expressed satisfaction the case is closed and has promised to work with other regulators to review the process for classifying entities as systemically important.
Reuters (18 Jan.),  The Wall Street Journal (tiered subscription model) (18 Jan.) 
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Market Activity
Asian-Pacific markets mostly higher after weak close on Wall Street
Most Asian-Pacific stock markets advanced Friday after US equity markets posted a modest downturn and traders braced for a possible shutdown of the government. Japan's Nikkei 225 rose 0.2%; Hong Kong's Hang Seng Index moved up 0.4%; Australia's S&P/ASX 200 declined 0.2%; China's Shanghai Composite gained 0.4%; South Korea's Kospi advanced 0.2%; and India's Sensex was up 0.7%.
CNBC (19 Jan.),  The Economic Times (India) (19 Jan.) 
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Qualcomm's $38B acquisition of NXP gets EU approval
US chipmaker Qualcomm's deal to buy NXP Semiconductors for $38 billion got the go-ahead from EU antitrust regulators. The deal will make Qualcomm the world's leading supplier of chips for the automotive market.
Reuters (18 Jan.) 
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CEO: Saudi Aramco to press ahead with IPO this year
Saudi Aramco is committed to holding an initial public offering in the second half of this year but is waiting for the government to decide where to list, CEO Amin Nasser says. The entire company will be listed, rather than creating a subsidiary for the IPO, he says.
Reuters (18 Jan.) 
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Ping An Healthcare reportedly raises almost $1B ahead of IPO
Chinese medical startup Ping An Healthcare Management raised nearly $1 billion in a private funding round that gave it an $8.8 billion valuation, two people familiar with the matter said. The startup is preparing for an initial public offering in Hong Kong.
Reuters (18 Jan.) 
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Economics
China's Q4 GDP growth outstrips expectations
The Chinese economy expanded 6.8% in the fourth quarter compared with Q4 of 2016, faster than expected. The development is expected to help policymakers, who are trying to reduce debt and pollution without reining in growth.
Reuters (18 Jan.),  BBC (18 Jan.) 
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Weidmann at odds with Lagarde over German surpluses
Weidmann at odds with Lagarde over German surpluses
Lagarde and Weidmann (Sean Gallup/Getty Images)
Bundesbank President Jens Weidmann has dismissed criticism from Christine Lagarde, managing director of the International Monetary Fund, that Germany's current-account and budget surpluses are excessive and that some cash reserves should be diverted to public spending. Lagarde contends lowering the surpluses would reduce global imbalance and curb protectionism, but Weidmann has countered an increase in public spending "would likely be a futile undertaking."
Bloomberg (free registration) (18 Jan.),  Reuters (18 Jan.) 
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Geopolitical/Regulatory
EU: Banks have fewer bad loans but still need capital
A European Commission report says that the value of nonperforming loans on banks' balance sheets is declining but that the total is still excessive. The commission plans to introduce "statutory prudential backstops" to ensure banks set aside enough capital to absorb losses from loans that go bad.
Reuters (18 Jan.),  Politico Pro (subscription required) (18 Jan.) 
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SEC: Issues need resolution before bitcoin ETFs get OK
Investor-protection issues must be addressed before exchange-traded funds linked to bitcoin are allowed, according to the Securities and Exchange Commission. The SEC has asked sponsors that have sought approval of bitcoin ETFs to withdraw their applications.
Reuters (19 Jan.),  The Wall Street Journal (tiered subscription model) (19 Jan.) 
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FINRA projects declining revenue this year
The Financial Industry Regulatory Authority said that it expects revenue to fall to $822 million this year from $828.7 million in 2017 but that it will not propose higher fees for members. FINRA said it will make up for any revenue shortfall by drawing funds from reserves.
InvestmentNews (tiered subscription model) (18 Jan.),  ThinkAdvisor (free registration) (18 Jan.) 
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More states move to end abuse of older investors
Thirteen states have adopted the North American Securities Administrators Association's model legislation requiring professionals to act if they suspect elder financial abuse. About 10 states are likely to follow this year, said NASAA President Joseph Borg.
InvestmentNews (tiered subscription model) (18 Jan.) 
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Cuomo wants N.Y. to tax carried interest as ordinary income
New York Gov. Andrew Cuomo has offered a bill that would tax carried interest as ordinary income, rather than as capital gains. If approved, the change will not take effect until Connecticut, New Jersey, Massachusetts and Pennsylvania make similar changes.
Pensions & Investments (free access for SmartBrief readers) (18 Jan.) 
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Financial Products
Barclays rolls out 15 ETNs linked to commodities
Barclays has brought to NYSE Arca 15 exchange-traded notes exposing investors to commodities. The bank plans to delist some commodity ETNs from the same exchange.
ETF Trends (18 Jan.),  Bloomberg (free registration) (19 Jan.) 
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