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Opening Bell: 7.11.17

Randy Quarles finally gets his Fed spot; low volatility is good for Tinder; a whole lot of millennials use Venmo for drug transactions; and more.
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By U. S. Treasury (U. S. Treasury hard copy for G8 Summit) [Public domain], via Wikimedia Commons

By U. S. Treasury (U. S. Treasury hard copy for G8 Summit) [Public domain], via Wikimedia Commons

Trump Will Nominate Quarles as Fed’s Top Wall Street Regulator (BBG)
In his current post at the Cynosure Group, Quarles helps invest money from wealthy families, including the Eccles family of Utah. Quarles is married to Hope Eccles. Another member of the family, Marriner Eccles, was Fed chairman from 1934 to 1948, and one of the buildings at the central bank’s Washington headquarters is named after him.

Bored Traders on Tinder Are a Symptom of Wall Street Revenue Dip (BBG)
One bond trader says he’s been slipping out early to watch his kids play sports. A fund manager says his office just staged a golf retreat. A trading supervisor at another bank confides he’s swiping through a lot of profiles on Tinder, the dating app. Welcome back, Wall Street, to the doldrums.

China: Deleveraging is Hard to Do (Money and Banking)
While the need to foster financial discipline is obvious, the process will be precarious. Ning Zhu, the author of China’s Guaranteed Bubble, has compared the scaling back of state guarantees to defusing a bomb. China’s guarantees have distorted incentives and risk taking for so many years that stepping back and allowing market forces to operate will inevitably impose large, unanticipated losses on many people and businesses. Financial history is replete with failed policy efforts to address credit-fueled asset price booms, such as the current one in China’s real estate. There is no safe mechanism for economy-wide deleveraging.

Umbrella-sharing startup loses nearly all of its 300,000 umbrellas in a matter of weeks (Shanghaiist)
With bike-sharing companies like Mobike becoming incredibly successful in Chinese cities, a few startups have decided to mimic the concept with shareable umbrellas. The only problem: most of the umbrellas have gone missing. Only a few weeks after starting up operations in 11 cities across China, Sharing E Umbrella announced that it had lost almost all of its 300,000 umbrellas.

E-Commerce as a Jobs Engine? One Economist’s Unorthodox View (NYT)
Mr. Mandel has combed through the job statistics on a county-by-county basis and come to this counterintuitive view: From December 2007 to May 2017, by his count, the e-commerce industry has created 397,000 jobs in the United States, and this compares with the loss of 76,000 jobs in the traditional retail industry. And those jobs related to e-commerce, he says, pay about 30 percent more than the brick-and-mortar ones.

Will Bitcoin Tear Itself Apart? (BBG)
Behind the conflict is an ideological split about bitcoin’s rightful identity. The community has bitterly argued whether the cryptocurrency should evolve to appeal to mainstream corporations and become more attractive to traditional capital, or fortify its position as a libertarian beacon; whether it should act more as an asset like gold, or as a payment system.

Where’s the Next Bubble? (Jeffery Kleintop)
Only in the past year have the stocks of the dotcom bubble measured by the NASDAQ Composite Index climbed back above their March 2000 peak. But a narrow sub-industry of internet stocks, internet retailers, is up well over 1,000% from the low in March 2009.

Nearly a Third of Millennials Have Used Venmo to Pay for Drugs (LendEDU)
One thing is for certain: Venmo has become a medium to make shady transactions, and a sizable portion of millennials are using it for exactly that.

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Three Questioned In Libor Probe (WSJ) While the SFO didn't identify the men, one of them is Thomas Hayes, a former trader at UBS and Citigroup, according to people familiar with the matter. Authorities in multiple countries have been looking into Mr. Hayes as an alleged coordinator of a group of employees at multiple banks who sought to manipulate the London interbank offered rate, or Libor, according to people familiar with the case. One of the others arrested was Terry Farr, an employee of British brokerage firm R.P. Martin Holdings Ltd. in London who is currently on leave from the firm, according to a person familiar with the case. Mr. Farr has been under investigation for possibly helping bank employees coordinate their efforts to influence Libor, according to people familiar with the case. HSBC Mexican Branches Said to Be Traffickers’ Favorites (Bloomberg) From 2006 to 2010, the Sinaloa cartel in Mexico and the Norte del Valle Cartel in Columbia moved more than $881 million in proceeds through HSBC’s U.S. unit, said Lanny Breuer, assistant attorney general for the U.S. Justice Department’s criminal division. 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"I'm not at altogether clear how much control (Speaker) Boehner has over the overall caucus," Greenspan said. "At the end of the day it will all work out but it's going to be a bit hairy before we get there." Buffett Joins Soros in Effort to Raise Taxes on Estates (Bloomberg) Billionaireinvestors Warren Buffett and George Soros are calling on Congress to increase the estate tax as lawmakers near a decision on tax policies that expire Dec. 31. In a joint statement Tuesday, Buffett, Soros and more than 20 other wealthy individuals asked Congress to lower the estate tax’s per-person exemption to $2 million from $5.12 million and raise the top rate to more than 45 percent from 35 percent. An estate tax structured this way will “raise significant revenue to reduce the deficit and fund vital services, will only be paid by the top one percent of estates, will raise more from the wealthiest estates” and will simplify compliance, said the statement. 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