Stocks slip again; Trump moves on virus response | Bank group to urge EU to maintain post-Brexit ties | US G-SIBs see 2019 rates, commodity trading rise
27 February 2020
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Morning Bell
Stocks continue to decline in the US, Asia and Europe, with futures trades indicating further losses and lower oil prices, as the coronavirus outbreak widens. President Donald Trump has appointed Vice President Mike Pence to spearhead the US response to the outbreak.
Full Story: The Wall Street Journal (tiered subscription model) (26 Feb.),  Financial Times (subscription required) (27 Feb.),  CNN (27 Feb.),  Politico (26 Feb.) 
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Industry News
The European Banking Federation is preparing to ask EU officials to keep politics out of banking and to ensure post-Brexit ties between the EU and the UK run smoothly. The federation is working on a document to illustrate how equivalence could "avoid fragmentation in European financial markets", spokesman Raymond Frenken says.
Full Story: BNN Bloomberg (Canada) (26 Feb.) 
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The US systemically important banks saw trading of fixed income and interest rate contracts rise 154% to $21.4 billion in 2019, while trading revenues from commodity and other exposures rose 18% to $3.4 billion, according to Federal Reserve data. The banks also saw an aggregate $607 million decline in trading revenues due to valuation adjustments to derivatives.
Full Story: Risk (subscription required) (26 Feb.) 
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Global corporate debt markets from investment-grade to high-yield are moving into the same downward performance cycle as equity markets and look set to shed the gains made so far this year, as a result of the coronavirus outbreak. The debt markets shrugged off most of last year's political and economic turmoil but Peter Tchir, head of macro strategy at Academy Securities, predicts that "The environment for credit is going to get a little bit harder than it's been."
Full Story: BNN Bloomberg (Canada) (26 Feb.) 
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The pound suffered losses during trading yesterday as hopes faded that UK finance minister Rishi Sunak would announce significant fiscal stimulus measures in his March 11 budget statement. "My sense is the market is pulling back on long pound positions originally destined to run into an upbeat expansionary fiscal stance in next month's budget," said Mizuho trader Neil Jones.
Full Story: Reuters (27 Feb.) 
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Saudi Aramco is preparing for a secondary listing outside Saudi Arabia, sources say. Executives reportedly are talking with Wall Street banks, although no timetable has been set for the listing.
Full Story: BNN Bloomberg (Canada) (26 Feb.) 
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Australia's stock market has been the world's best performer over the past 120 years, according to a Credit Suisse study covering 22 equity markets worldwide and dating back to 1900. The report puts the US in second place, followed by South Africa and New Zealand.
Full Story: BNN Bloomberg (Canada) (26 Feb.) 
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Regulatory Roundup
Money managers are concerned by a European Commission suggestion that a ban on bundled research and transaction payments under the revised Markets in Financial Instruments Directive be amended to exempt small and midsize businesses. "I think it would be a danger to consider exempting some parts of the market from those rules, as that will only create further unintended consequences," Federated Hermes investment manager Eoin Murray says.
Full Story: Pensions & Investments (free access for SmartBrief readers) (24 Feb.) 
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City of London executives told the UK Parliament that maintaining EU equivalence should remain its primary negotiating position, with some flexibility on creating and interpreting rules.
Full Story: Financial Times (subscription required) (26 Feb.) 
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Spotlight on China
UBS is telling its wealth management clients to treat the coronavirus outbreak as the right moment to stock up on both Chinese and emerging market equities. "We think investors should be buying the dip in emerging-market stocks and specifically Chinese stocks," said Maximilian Kunkel, UBS' chief investment officer for Germany.
Full Story: BNN Bloomberg (Canada) (26 Feb.) 
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Tech Trends
Investment robo-advisor M1 Finance has announced the total value of the assets on its platform passed the $1 billion mark. M1 has taken just 41 months to reach the milestone, against 50 months and 52 months for rivals Betterment and Wealthfront, respectively.
Full Story: Benzinga (26 Feb.) 
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Editor's Note
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Correction
A summary in Wednesday's edition included an incorrect numerical amount. It should have said that S&P Global Ratings estimates the ratio for nonperforming loans at Chinese banks could nearly double. SmartBrief regrets the error.
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Correction
A summary in Wednesday's edition included incorrect numerical values and other information. It should have said that JPMorgan Chase expanded its presence in bond, currency and commodity trading by nearly 1 percentage point last year, while Goldman Sachs widened its footprint in stock and derivatives trading by 1.5 percentage points, but European entities' market share declined. SmartBrief regrets the errors.
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An empty canvas is a living wonder -- far lovelier than certain pictures.
Wassily Kandinsky,
painter, art theorist, pioneer of abstract art
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