Opening Bell: 10.24.17

Mark Johnson ruins it for the rest of the forex world; Klarman has Baupost at 40 percent cash; Ray Dalio is talking wealth transfers; Amazon but for weed; and more.
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HSBC Trader’s Conviction Will Echo Through $5 Trillion FX Market (BBG)
“When these cases get a conviction -- or even if they don’t end in conviction but they get a huge amount of airtime -- basically compliance tends to round people up into relevant meetings and say, ‘All right, what are our controls like,’ and ‘Let me remind you of the rules’...You’re going to see a lot more focus from the compliance professionals at these firms and higher up to really clamp down.”

Barclays May Hire More Traders as CEO Embraces Risk (BBG)
Adeel Khan -- the trader who has driven rapid growth in credit trading over the past two years -- may hire more staff and allocate capital in the British bank’s small distressed business, which has historically lagged U.S. rivals, said the person. Executives also want to expand in U.S. structured credit, especially collateralized debt obligations, or CDOs, building on its recent success with the instruments in Europe, the person said.

KLARMAN: Investors are asking the wrong question about the stock market (BI) "First-level thinking says that a 4% bond is better than a 2% bond, which everyone can see. Second-level thinking is that 4% may be insufficient return for the risk," he said. "The other facet of this thinking is the presupposition that the only relevant opportunity set is the current one." Klarman didn't specify his cash holdings in the letter, but a person familiar with the firm said Baupost holds about 40% of its assets in cash.

Two Sigma’s rapid rise to top of quant hedge fund world (FT)
Quants tend to have a different background to typical hedge funds. More than half of Two Sigma’s 1,200 staff come from outside the finance industry, with most educated in mathematics and computer science. They include the winner of a Japanese backgammon tournament and the “world’s first open-source software artist”, according to a graphic novel handed to new recruits.

Our Biggest Economic, Social, and Political Issue The Two Economies: The Top 40% and the Bottom 60% (Ray Dalio)
While my goal is simply to convey what is, rather than delve into what to do about it, I do want to be clear that giving money to be used for consumption rather than for improving production or cutting costs to improve efficiency (e.g., reducing incarceration rates and costs) will diminish the value of money and not increase the size of the pie. For that reason, some mix of a) directing resources so that they are used productively to generate more than enough income or savings in order to pay for themselves and b) productive wealth transfers appears inevitable.

Is a Taylor Tantrum on the Horizon? (PragCap)
You’ll notice there is that there’s about a 2% difference between the current Fed Funds Rate and where Taylor’s Rule says the overnight rate should be. So, it’s pretty interesting that bond markets are so ho-hum about the current environment because there’s a very real chance that Taylor will get nominated and his hawkish views could dominate the Fed’s policy moves in the coming years.

Study: NYC Could See Bad Flooding Every 5 Years (AP)
Rising sea levels could mean that floods of 7.4 feet or more that struck the New York city area roughly once every 500 years before 1800, and which occur roughly every 25 years now, could happen once every five years between 2030 and 2045. Researchers made no recommendations on what public officials or others should do to prepare.

Florida Couple’s Amazon Delivery Came With 65 Pounds of Free, Dank-Ass Weed (Gizmodo)
Two Amazon customers who purchased 27 gallon plastic storage bins earlier this year were surprised to find their UPS delivery weighed 93.5 pounds, approximately 65 pounds of which was tightly compacted bales of marijuana. Per WFTV, the Orlando couple who had placed the Amazon order somewhat understandably deemed this precious gift unwelcome and immediately contacted the authorities.

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Barclays High-Pay Culture Brought Disrepute: Report (WSJ) Barclays PLC suffered from "a lack of self-awareness" in recent years as a culture of high pay and short-term incentives brought the bank into disrepute, according to an independent report by lawyer and investment banker Anthony Salz. The Salz Review, which was commissioned by Barclays' former chairman after the bank admitted to trying to rig interbank interest rates last summer, describes how in about 10 years the lender expanded to become a disparate set of businesses, each with its own culture. "The result of this growth was that Barclays became complex to manage," the report published Wednesday said. "Despite some attempts to establish group-wide values, the culture that emerged tended to favor transactions over relationships, the short term over sustainability, and financial over other business purposes." The 235-page report—which cost Barclays about £17 million ($25.7 million) to have produced—recommended a series of reforms aimed at trying to foster a common sense of purpose across the bank. To this end, Barclays' board must play a more active role in overseeing the business and Barclays' human resources department must be given more power to stand up on issues such as pay, the report said. Ex-Goldman Sachs Trader Taylor Said to Surrender to FBI (Bloomberg) Former Goldman Sachs Group Inc. traderMatthew Taylor planned to surrender today to the Federal Bureau of Investigation, a person familiar with the matter said. Taylor was accused Nov. 8 by the U.S. Commodity Futures Trading Commission of concealing an $8.3 billion position in 2007 that caused New York-based Goldman Sachs to lose $118 million. Morgan Stanley hired Taylor in March 2008, less than three months after Goldman Sachs disclosed in a public filing that he had been fired for building an “inappropriately large” proprietary trading position. Cyprus Bailout Details Emerge After IMF Deal (WSJ) The IMF statement set out the tough terms the tiny nation of 800,000 has to meet to get the bailout, calling the task ahead "challenging." Cyprus, an economy of roughly €17 billion in annual output, needs to push through cuts and savings worth 4.5% of gross domestic product by 2018 to hit a primary-surplus target of 4% of GDP outlined in the bailout deal, the IMF statement said. These cuts will come on top of savings worth 5% of GDP the government is already implementing through to 2015. An extra 2% of GDP in extra revenue will come from an increase in the country's corporate tax from 10% to 12.5% and an increase in the tax on interest income from 15% to 30%. The country's corporate-tax rate will remain among the lowest in Europe, on an equal footing with Ireland's, and will allow Cyprus to continue to use its tax regime to attract businesses, but the increase in withholding tax will make it substantially less attractive as a place for individuals to leave their savings. Cyprus Leader Invites Family Firm Probe (FT) Cyprus president Nicos Anastasiades has urged judges investigating the country's banking disaster to examine transactions handled by his family law firm as "a priority" in a bid to defuse public anger over last-minute transfers by well-connected Cypriots, Russians and Ukrainians who thereby avoided a "haircut" on their uninsured deposits. The move followed questions over whether a company managed by the president's son-in-law made use of inside information to transfer more than 20 million euros out of Laiki Bank days before its collapse. Marc Lasry In French Follies (NYP) Lasry, the CEO and co-founder of Avenue Capital, is on his way to getting a plum assignment as the US ambassador to France as a reward for his many years as a big Democratic fundraiser. But the Moroccan-born, French-speaking American could encounter some uncomfortable moments when he lands in Paris, given his views on the land of fine wine, crusty baguettes — and European socialism. “We don’t invest in France,” he said at a New York hedge-fund conference sponsored by French bank BNP in June 2010, even apologizing to his hosts as he made the comment. Lasry, who is a bankruptcy lawyer by training, loves to chide other countries for their creditor-unfriendly ways. His $11.7 billion distressed debt fund buys up beaten-down credits of companies headed towards bankruptcy, with the payout determined by their ranking in the process. That can be dicey in countries like France, he explained at the BNP conference, as “the legal system is very much tilted towards helping unions and workers.” As a result, he said, “you might find your claim disallowed.” 1,000 pot plants seized in Queens in warehouse raid (NYDN) A massive drug operation went up in smoke Tuesday when law enforcement officials raided an indoor marijuana farm in Queens. Authorities seized more than 1,000 pot plants - along with grow lights and other gear - from the 44th Rd. warehouse in Long Island City just after 3 p.m. , police sources said. Officials from the NYPD, state police and the federal Drug Enforcement Agency also rounded up five suspects in the sweep. New York-for-Buenos Aires Swap Theory Spreads: Argentina Credit (Bloomberg) Argentina’s refusal to improve its offer to holders of defaulted debt suing for full payment in the U.S. is deepening speculation that the nation will sever ties with the overseas bond market. The proposal submitted on March 29 mimics the terms of Argentina’s 2005 and 2010 debt exchanges, a move that could lead to a default on the restructured notes unless the country removes them from U.S. jurisdiction. BofA Chief Moynihan Said to Summon Managers for Revenue Push (Bloomberg) Bank of America Corp. Chief Executive Officer Brian T. Moynihan has summoned more than 100 of his regional leaders to a private meeting today where they’ll be pushed to boost the lender’s flagging revenue, said two people with direct knowledge of the project. Managers at the two-day event in Chicago will be judged on how much progress they’ve made in helping to sell more products to the 53 million customers of the second-biggest U.S. lender, said the people, who asked for anonymity because Moynihan’s plan hasn’t been made public. Revenue has dropped every year of Moynihan’s three-year tenure as he sold assets, repaired the firm’s balance sheet and settled more than $40 billion in claims tied to defective mortgages. Private Sector Adds 158,000 Jobs (WSJ) Economists surveyed by Dow Jones Newswires expected ADP to report a gain of 192,000 private jobs. However, the February job gain was revised up to 237,000 from 198,000 reported a month ago. SEC Embraces Social Media (WSJ) In a ruling that portends changes to how companies communicate with investors, the Securities and Exchange Commission said Tuesday that postings on sites such as Facebook and Twitter are just as good as news releases and company websites as long as the companies have told investors which outlets they intend to use. Gray seal pup saved from death on Montauk beach now recovering (NYDN) The three-month-old seal, underweight at 40 pounds, is now resting in one of the foundation's rehabilitation tanks at the Atlantic Marine World aquarium in Riverhead. "She feels very sassy in her tank and doesn't appreciate anything we are doing for her," laughed Kimberly Durham, director of the rescue program, "which is a good sign. A nasty seal is a good sign that she is getting better because they are wild animals.

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Opening Bell: 1.27.17

Ackman tries subtlety for a change; hedge funds hit paydirt tracking planes; at least one Burger King has a secret weed menu; and more.

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Opening Bell: 11.7.17

Ray Dalio's number-two is reportedly kinda handsy; Forbes says Wilbur Ross lied to them about being a billionaire for years; Dick Fuld is back, baby; Bjork wants to give you cryptocurrency; and more.