Opening Bell: 8.16.17

Frankfurters Aren’t Rolling Out the Welcome Mat for Brexit Bankers (WSJ)
As Germany’s financial hub steps up its campaign to attract bankers from London, residents—already faced with rising property prices and many construction projects around the city—are starting to say “nein.” “The city shouldn’t be spending my taxes to get bankers from London," said Almuth Mayer, a nurse who lives in central Frankfurt and has joined one of several protest groups that have sprung up demanding city officials act to curb spiraling housing costs. Demonstrations are being planned outside luxury housing blocks to coincide with the national election campaign in September.

Larry Summers: Why don’t all CEOs quit Trump’s advisory councils? (FT)
No advisor committed to the bipartisan American traditions of government can possibly believe he or she is being effective at this point. And all should feel ashamed for complicity in Mr Trump’s words and deeds. I sometimes wonder how they face their children. SEE ALSO: Unlike manufacturing council, no member of Trump’s “Strategic and Policy Forum” has resigned over Charlottesville

Goldman expands algorithmic corporate bond trading (FT)
Goldman Sachs has expanded its algorithmic corporate bond trading programme, more than trebling the number of securities it quotes since last summer to more than 7,000 — and is now eyeing an expansion into areas such as junk bonds later this year. The bank’s algorithm scrapes publicly-available pricing data for thousands of bonds to automatically generate firm, tradable prices for investors. Earlier this year it broke into the ranks of the top-three dealers on MarketAxess in US investment grade odd-lots.

Why I’m Not Worried About Household Debt (PragCap)
A big part of what was happening in 2008 was that the new debt being issued was being issued to people with low credit quality. So you had a low quality income stream servicing a high quantity of debt. Today is different. There is more income servicing the same amount of household debt as the 2008 peak. And the overall quality of the debt has improved. So you have a higher quality income stream servicing the same amount of debt. This means that the new peak in household debt is far less worrisome than the levels we saw in 2008 and more likely part of a much needed boost in overall debt servicing more productive economic purposes.

There’s a Reason People Are Worried About Low Volatility (BBG)
A study of 40 financial-asset bubbles conducted concluded that in about two-thirds of the cases the crashes followed a spell of lower volatility -- the "lull before the storm." [...] "Our main finding is that volatility is neither a reliable indicator of the maturation of a bubble nor of its impeding ending in a crash," Sornette and his colleagues wrote in a study posted last month. That in turn casts "doubts on the supposed general relationship between risk and return," they concluded.

For Rajat Gupta, Returning Is a Hard Road (NYT)
During Mr. Gupta’s heyday, he was a sought-after board member and a regular attendee at gilded events like the World Economic Forum’s annual meeting in Davos, Switzerland. Now, Mr. Gupta cannot get his former firm, McKinsey, which he led for nine years, to even acknowledge him.

Massachusetts Probes Retail Brokers Over Exchange Payments (WSJ)
The probe focuses on a longstanding practice in the U.S. stock market called “maker-taker,” by which exchanges pay rebates to traders who post new orders, while collecting fees from traders who execute against orders posted on the exchange. “The ‘kickbacks’ he is referring to have been explicitly approved by the Securities and Exchange Commission for almost 20 years,” said Michael Friedman, who is general counsel of Trillium Management LLC.

Elliott digs in against BHP Billiton as the world's loudest activist takes on the biggest miner (Telegraph) "Think Smart” yell the billboards across Sydney, Melbourne, Brisbane and Perth. “Tell BHP it’s time for CHANGE.” The slogan is a play on BHP Billiton’s recently unveiled strapline “Think Big”, and the advertising campaign is the latest salvo from activist investor Elliott Advisors, which wants the world’s biggest mining company to shake up its strategy. SEE ALSO: Akzo, Elliott Call Truce as CEO Gains Breathing Space for Split.

The S&P 500: Just Say No (GMO)
If earnings and dividends are remarkably stable (and they are), to believe that the S&P will continue delivering the wonderful returns we have experienced over the last seven years is to believe that P/Es and margins will continue to expand just as they have over the last seven years. The historical record for this assumption is quite thin, to put it kindly. It is remarkably easy to assume that the recent past should continue indefinitely but it is an extremely dangerous assumption when it comes to asset markets. Particularly expensive ones, as the S&P 500 appears to be.

Stanley Fischer, Fed vice-chair, on the risky business of bank reform (FT)
“It took almost 80 years after 1930 to have another financial crisis that could have been of that magnitude. And now after 10 years everybody wants to go back to a status quo before the great financial crisis. And I find that really extremely dangerous and extremely short-sighted. One can understand the political dynamics of this thing, but one cannot understand why grown intelligent people reach the conclusion that [you should] get rid of all the things you have put in place in the last 10 years.”

Cheetos pop-up restaurant is real — and it’s ‘classy’ (NYP)
The Cheetos pop-up, dubbed “The Spotted Cheetah,” is located on West Broadway at Franklin St. inside the Distilled gastropub. The menu — which includes Cheetos meatballs, Cheetos crusted fried pickles, and Flamin’ Hot and White Cheddar Mac n’ Cheetos — was created by celebrity chef Anne Burrell.