Hedge Funds Wrong-Footed by Prospect of Interest-Rate Rises (WSJ)
The losses are the latest setback in a tough year for many quantitative hedge funds. They’ve received tens of billions of inflows from investors in recent years, even as funds run by humans have suffered large outflows, as investors hunt for other ways of making money in markets driven by central bank stimulus. However, many quant funds have recently failed to live up to expectations, with many of the market trends they like to track proving short-lived. HFR’s index of quant funds that bet on market patterns is down 3% through September, with most of that loss coming last month. Hedge funds overall are on average up 5.7%.
SEC Alleges Rio Tinto Misled Investors Over Value of Coal Assets (WSJ)
Rio Tinto continued to value the mining assets in Mozambique at more than $3 billion despite an internal assessment that they were worth negative $680 million, according to a lawsuit filed in Manhattan federal court. The SEC's lawsuit alleges that former Chief Executive Thomas Albanese and former Chief Financial Officer Guy Elliott knew about the project’s rapidly declining value but didn’t disclose it to investors and misled their board of directors about the scope of the problems.
Wall Street found a parasite growing in the US economy that could spur the next recession (BI)
The bet here is simple: America, one way or another, will be forced to confront the parasite that is its healthcare system, and the companies that are using the sleaziest tactics will be picked off first — by prosecutors, lawmakers, insurance companies, or the press — leaving sick customers in the lurch. Short sellers are talking about this thesis at conferences and sending it around in their email newsletters. They're learning about scams and picking off weak companies to bet against. They see rising costs as a bubble that will be either gently deflated through federal-government intervention or violently popped by the merciless hand of the market — with a savvy investor making money either way.
Mnuchin: US stocks to face ‘significant’ fall without tax reforms (FT)
Steven Mnuchin said in a Politico podcast that there is “no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done”. He added that the spectre of regulatory relief has also been priced into stocks. He reckons equities will “go up higher” if the tax plans, which include a reduction in the statutory corporate tax rate, are passed.
Robots Are Coming for These Wall Street Jobs (BBG)
This map of trading automation is based on interviews with about a dozen senior banking and investing executives on Wall Street, many of whom focus on adopting new tech. It offers a sense of their projects -- some of them just starting -- that will affect traders within big firms.
Brexit Talks Are Failing. Somebody Needs to Care. (BBG)
The U.K. government can't compromise because that would reveal as fiction the underlying Brexit claim that Britain doesn't need Europe. The EU side can't compromise because its main motivation is to deter other would-be rebels. Because the EU holds the better cards, it's likely to win the staring contest. But there's every possibility that the U.K. government — in this sense not unlike the Catalan one now facing an ultimatum from Madrid — would prefer to go down in a blaze of Brexit glory than humbly seek to get the best it can for its people.
Bitcoin and the Yuan (CFR)
Bitcoin is no longer a China story, and hasn’t been since early this year. The yuan’s swift appreciation beginning in late May of this year laid this fact very bare. The “Chinese-outflows-are-driving-the-price-of-bitcoin” narrative would predict that sustained appreciation in the yuan would depress the price of bitcoin as more Chinese would be willing to hold on to their yuan. Instead bitcoin soared: gaining some 90 percent over the same period that the yuan appreciated almost 6 percent against the dollar.
This Is What A 21st-Century Police State Really Looks Like (BuzzFeed)
Armed police, paramilitary forces, and volunteer brigades stand on every street in Kashgar, stopping pedestrians at random to check their identifications, and sometimes their cell phones, for banned apps like WhatsApp as well as VPNs and messages with religious or political content. Other equipment, like high-resolution cameras and facial recognition technology, is ubiquitous. In some parts of the region, Uighurs have been made to download an app to their phones that monitors their messages. Called Jingwang, or “web cleansing,” the app works to monitor “illegal religious” content and “harmful information.”
Inside a Secretive Group Where Women Are Branded (NYT)
Each woman was told to undress and lie on a massage table, while three others restrained her legs and shoulders. According to one of them, their “master” instructed them to say: “Master, please brand me, it would be an honor.” A female doctor proceeded to use a cauterizing device to sear a two-inch-square symbol below each woman’s hip, a procedure that took 20 to 30 minutes. For hours, muffled screams and the smell of burning tissue filled the room. “I wept the whole time,” Ms. Edmondson recalled. “I disassociated out of my body.”