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Sep 19, 2019

EU - FX | Currencies: Dollar mixed, euro higher after hawkish central bank shift

3 minutes - Source: CNBC

GP: U.S. Dollars 180305
Hand holding U.S. dollar banknotes in China on January 25, 2018.
Zhang Peng | LightRocket | Getty Images
The U.S. dollar was mixed on Thursday morning, weaker against the euro, the Swiss franc and the Japanese yen, but stronger versus the Antipodean currencies after a slew of central bank decisions came in more hawkish than expected.
The Federal Reserve on Wednesday cut interest rates by 25 basis points to provide insurance against risks including weak global growth and resurgent trade tensions, while signaling a higher bar to further reductions in borrowing costs.
Subsequently, the Swiss National Bank, the Bank of England and the Bank of Japan all kept their policies on hold. Norges Bank increased its key policy rate, moving its rates in the opposite direction of the United States and European Union.
The dollar dipped, 0.18% lower against a basket of currencies, despite Fed Chair Jerome Powell’s statement that “what we think we are facing here is a situation which can be addressed, which should be addressed, with moderate adjustments to the federal funds rate.” Powell noted that the U.S. labor market was strong and inflation was likely to return to the Fed’s 2% annual goal.
Central banks “came off a really bad month of August for risk and for sentiment,” said Brian Daingerfield, macro strategist at RBS Securities in Stamford, Connecticut.
“But as September dawned, some of the worst U.S.-China trade escalation has pulled back, the market has been pricing out the possibility of a near-term no-deal Brexit as we prepared for elections in the UK. Some of the economic data have brightened a bit,” he added.
Against the dollar, the euro was 0.13% stronger, last at $1.1043.
Elsewhere, the Japanese yen maintained earlier gains after the Bank of Japan kept interest rates on hold, last up 0.37% against the dollar. The BOJ also signaled the chance of expanding stimulus as early as its next policy meeting in October by issuing a stronger warning over the risks threatening the economy.
The central banks are generally “kind of holding their breath and holding their fire in terms of fully acknowledging that further easing could come down the road but not moving in a proactive way towards additional easing,” said Daingerfield.
Against the Australian and New Zealand dollars the U.S. dollar was stronger, up 0.47% and 0.21% respectively.

Bonds | Treasury Yield Report: US Treasury yields fall after Fed cuts rates

Thomas Franck, Silvia Amaro

U.S. government debt yields fell Thursday after the Federal Reserve in the prior session failed to signal further rate cuts in 2019, disappointing some investors who’d been hoping for hints at looser monetary policy.
The yield on the benchmark 10-year Treasury note dropped to 1.768%, while the yield on the 30-year Treasury bond was also lower at 2.211%.
The fixed income moves came after the Fed cut the benchmark overnight lending rate by 25 basis points on Wednesday, its second such move in 2019. However, the central bank dampened market expectations by steering clear of signalling further rate cuts this year.
Following its two-day policy meeting, the central bank said it would lower its benchmark overnight lending rate to a target range of 1.75% to 2%.
The Fed’s had trouble keeping the effective federal funds rate — the actual interest banks charge each other overnight — below the upper bound of its target range. The effective federal funds rate rose to 2.3% on Tuesday, breaking above the range for the first time since the global credit crisis more than a decade ago as a confluence of factors including corporate tax day and less liquidity pushed the price of capital up.
On the data front, there will be jobless claims and current account numbers due at 08:30 a.m. ET, and existing home sales due at 10:00 a.m. ET.
The Treasury is set to auction $50 billion in 4-week bills, $40 billion in 8-week bills and $32 billion in 7-year notes.

U.S. Market | Wall Street Closing Report: S&P 500 closes flat, hovering near record high

Thomas Franck

The Dow Jones Industrial Average gave up a 100-point gain and the S&P 500 backed away from an all-time high on Thursday as investors checked their optimism about renewed U.S.-China trade talks.
The Dow traded around flatline as gains in Microsoft and UnitedHealth balanced losses in Boeing and Walt Disney. The S&P 500 rose 0.1% thanks to gains in health-care and materials stocks, while the Nasdaq Composite also added 0.1% amid strength in Amazon, Facebook and Alphabet.
The S&P 500 was about 0.5% away from its record high in afternoon trading.
Equities trimmed their earlier gains after a state-backed Chinese media report said that known China hawk and Trump advisor Michael Pillsbury warned the U.S. is ready to escalate the trade war if a deal isn’t struck soon.
Stocks continued to pare gains after a tabloid editor at the official newspaper of the Communist Party of China tweeted that China was in no rush to make a trade deal with the U.S.
Despite the latest reports, Wall Street’s marginal optimism came amid a new round of face-to-face talks between Chinese and American officials that began on Thursday. The two-day negotiations are aimed at preparing for high-level talks in early October that will determine whether Washington and Beijing can progress toward a deal or resume the imposition of higher tariffs.
“In general, the market in September can be characterized as more rational: We’re at or near all-time highs and haven’t really budged from that in September,” said Art Hogan, chief market strategist at National Securities. “We’ve got U.S.-China trade becoming more constructive and there’s evidence as there’s been no escalation, there’s a little de-escalation.”
“All of that becomes a positive and the market seems to be OK when we can compartmentalize trade,” he added. “When relationships were deteriorating, the market made that the No.1 enemy.”
U.S. negotiators including White House economic advisor Peter Navarro and Treasury Secretary Steven Mnuchin have both expressed modest optimism for forthcoming rounds of talks between the world’s two largest economies following a volatile August.
Software giant Microsoft, meanwhile, climbed over 1.5% after announcing Wednesday evening that it authorized another $40 billion for share buybacks and will raise its quarterly dividend by 5 cents to 51 cents per share.
Wall Street ended Wednesday little changed after the Fed approved a rate cut of one quarter point, but offered little for investors hoping for hints that the central bank would lower borrowing costs toward the end of 2019. Officials continued to describe the U.S. labor market as “strong” and characterized GDP growth as “moderate.”
Chairman Jerome Powell, however, said that the Fed may have to resume the organic growth of its balance sheet sooner than expected to help ease money markets and prevent interest rates from rising too quickly. That could mean the the central bank is preparing to to act more often in 2020, according to Joe Terranova, chief market strategist at Virtus Investment Partners.
“I think it’s a misconception that it’s being viewed as a hawkish communication. I think that this definitely introduces — I agree with Jeff Gundlach — the possibility that the Federal Reserve is going to have to provide more liquidity,” he said.
Given the federal government’s high levels of borrowing over the past two years, “the Fed will have to be the marginal buyer once again and keep yields from uncomfortably rising,” Terranova added.
The Fed’s second rate cut of 2019 lowers the target range for the federal funds rate to between 1.75% and 2%.

World Politics: The reign of Bibi Netanyahu is ending

5-7 minutes - Source: The Economist

HIS DEVOTEES call him King Bibi, but the crown is slipping. Twice this year Binyamin Netanyahu, Israel’s prime minister, has gone to the country to ask voters for a clear majority. Twice they have denied him one. With almost all the votes counted from the ballot on September 17th, Mr Netanyahu’s Likud party was two seats behind Blue and White, a centrist alliance led by Benny Gantz, a former military chief. Mr Netanyahu’s coalition of right-wing and religious parties fell six short of a majority, a larger shortfall than at the previous election in April.
Mr Netanyahu (pictured, left) still hopes to cling to power as Mr Gantz (right), too, has no clear path to a governing coalition. Yet the era of King Bibi is surely coming to a close. Having lost his majority, Mr Netanyahu has lost almost all hope of obtaining immunity from prosecution on three counts of alleged corruption. And he has lost the aura of invincibility given by four terms and 13 years in power.
Liberals in Israel and around the world may dare to believe that, at last, Mr Netanyahu’s brand of ethno-nationalist politics can be defeated. Israel now has a chance to return to a more sane democratic politics. But only a chance.
Much will depend on how the coalition horse-trading plays out. By nosing ahead, Mr Gantz has the better claim to try to form a cabinet. But Mr Netanyahu remains caretaker prime minister until another government is formed. Even if he somehow stays in office, he will be much diminished. He will have to share power with his enemies—whether Mr Gantz or, worse, Avigdor Lieberman, an ex-aide who split with him and thwarted him. The best Mr Netanyahu can hope for is a government of national unity in which he and Mr Gantz take turns as leader. Even so, he will be vulnerable to prosecution and abandonment by allies.
In March this newspaper described Mr Netanyahu’s tenure as a parable of modern populism. He embraced muscular nationalism and elite-bashing long before these became a global force (though he adopted more sensible economic policies). During the campaign he reverted to type: although after 13 years in power he can hardly claim to be the underdog, he cast himself as the champion of the people against the elite. He claimed that policemen and prosecutors dogging him were leftists, even though he appointed many of them. The journalists who questioned him were denounced for purveying false news, though Israel Hayom, the biggest freesheet, is so loyal that Israelis call it bibiton (iton is Hebrew for newspaper).
Mr Netanyahu sowed distrust of Arab citizens. He accused Arab parties of fraud; a chatbot message on his Facebook page, since withdrawn, accused them of trying “to destroy us all”. As ever, he highlighted the threat of Iran and his friendship with President Donald Trump, who recognised Jerusalem as Israel’s capital. Above all, Mr Netanyahu sought to mobilise his right-wing base, promising to annex part of the occupied West Bank if re-elected.
None of these tactics worked, and some backfired. The threat to place cameras in polling stations, supposedly to deter Arab voter fraud, instead provoked a large Arab turnout. What were once acts of bravura from the man known as “the magician” now look like tired old stunts.
His potential replacement, Mr Gantz, presents himself as a warrior who wants peace, but has been worryingly vague about his policies. Do not expect him to rush into a deal with the Palestinians. A two-state peace deal, with a Palestinian state alongside Israel, may seem desirable to most of the world but appeals to only about half of Israelis. And many of them think it is unachievable right now: moderate Palestinians are too weak, and the radicals strong enough to spoil any accord. Most Israelis reckon the conflict can only be managed, not solved. At least under Mr Gantz some sort of dialogue with Palestinians might resume, and the threat of unilateral annexation will recede; perhaps there can be partial deals. If Mr Gantz makes a difference, it is more likely to be to the tenor of Israeli politics, whose drift towards intolerant ethno-nationalism he might arrest.
That said, what brought Mr Netanyahu down was not a victory of the peace camp, but a betrayal among nationalists. Mr Lieberman, formerly Mr Netanyahu’s chief of staff, has become Israel’s kingmaker. His breakaway party, Yisrael Beiteinu (Israel, Our Home), made bigger gains than any other by promising not to join any government unless it introduced secular reforms, which would in turn break Likud’s alliance with ultra-religious parties. That is welcome, but Yisrael Beiteinu is hardly liberal. It is more rabidly nationalist than Likud, having often led efforts to delegitimise Arab parties, and Mr Lieberman has been fending off accusations of corruption for as long as Mr Netanyahu has.
It is tempting to conclude that the parable has a hopeful moral: populism has found its limits; the institutions of liberal democracy can stand up to it. But the weakening of one kind of populism may simply have strengthened another. The work of embattled liberals in Israel, and elsewhere, is far from done. 

Health & Science: Walgreens to test drone delivery service with FedEx and Alphabet's Wing

Jasmine Wu

GP: A Walgreens Boots Alliance Location Ahead Of Earnings Figures
A pedestrian passes in front of a Walgreens Boots Alliance Inc. store in the Hollywood neighborhood of Los Angeles, California.
Christopher Lee | Bloomberg | Getty Images
Walgreens is testing a new on-demand delivery service with FedEx and Alphabet’s drone delivery service Wing, beginning next month, the company announced Thursday.
The pilot program will deliver food and beverage, over-the-counter medications and other items within minutes, the company said. Prescription deliveries will not be available.
“Walgreens continues to explore partnerships to transform and modernize our customer experience and we are proud to be the first retailer in the U.S. to offer an on-demand commercial drone delivery option with Wing,” said chief innovation officer Vish Sankaran. He said the company wants to provide customers the products they “need wherever, whenever and however they may want them.”
Walgreens is just one of the companies scrambling to capture customers who look for quicker and more convenient deliveries. Amazon said in June its new delivery drone should be ready “within months” to delivery packages to customers. CVS CEO Larry Merlo said in January the company was “doing some work” to distribute prescriptions by drone.
“We still have a ways to go before [drones are] the norm in our transportation networks and so on,” said James Burgess, chief executive of Wing. “There’s a lot of sensitivity and concern about the technology, and we’re engaging with partners like Walgreens and FedEx to learn and get feedback.”
He wouldn’t say how soon drone delivery might be available nationwide.
The service will be tested in Christiansburg, Virginia, which has been working with the U.S. Department of Transportation to test drone delivery since 2016. Walgreens said that if and when services expand, the company is in a unique position to appeal to consumers, since approximately 78% of the U.S. live within five miles of a Walgreens. Wing’s drone currently has a delivery range of 10 kilometers or about 6 miles.
The test allows customers to choose from more than 100 individual products or from packs of curated items for allergies, babies, kids’ snacks, or cough and cold. In April, Wing was first drone operator to be certified as an air carrier by the Federal Aviation Administration, which allows it to deliver commercial goods. Amazon received FAA approval for Prime delivery in June.
Walgreens’ stock has fallen 20% since January and the company has a market value of $49 billion.
Walgreens will be the first retailer in the U.S. to test an on-demand drone delivery service with Wing in Christiansburg, Virginia next month.
Source: Wing

Article of Gold: The Many Opportunities the Fed Day Has Dealt Us

5-6 minutes - Source: Sunshine Profits

Volatile trading is calming down, revealing several opportunities. The euro has retraced its yesterday's downswing, the Japanese yen is strengthening - just as the Canadian dollar is. Swiss franc is another currency we're keeping a close eye on. But how does it translate into our trading plans?

EUR/USD - Range-Bound for Now

The short term situation remains almost unchanged as EUR/USD is trading inside the blue slightly below the upper border of the yellow declining trend channel.
The buy signals remain on the cards, suggesting that we'll likely see a test of the upper border of the formation, or even of the recent high and the 38.2% Fibonacci retracement in the very near future.
Should the bulls show weakness in this area, we'll consider opening short positions.

USD/JPY - About to Invalidate Its Breakout?

USD/JPY moved slightly above the 50% Fibonacci retracement during yesterday's session, but the bulls didn't manage to hold gained ground, and a pullback followed earlier today.
As a result, the pair invalidated yesterday's breakout. Coupled with the extended position of the daily indicators, it suggests that further deterioration is just around the corner. Nevertheless, a bigger downside move will be more likely and reliable only if the exchange rate closes today or one of the following sessions below the previously-broken upper border of the declining grey trend channel.
Should we see such a breakout invalidation, we'll consider opening short positions.

USD/CAD - Back into the Consolidation?

For the third time in a row, USD/CAD moved above the upper border of the blue consolidation and the 61.8 Fibonacci retracement based on the September decline. The buyers however didn't manage to go any higher, and a pullback followed earlier today.
This way, the pair invalidated its earlier breakouts, which increases the probability of further deterioration in the coming days. Nevertheless, a decline will be more likely and reliable only if USD/CAD closes today or one of the following sessions below the upper border of the consolidation.
Should we see such price action, we'll consider opening short positions.

USD/CHF - Reversing Lower

Although USD/CHF extended gains in the previous days, the pink resistance zone and the proximity to the upper border of the green rising trend channel stopped the buyers.
The sellers took over, and the pair moved quite sharply lower earlier today. It suggests that further deterioration may still be ahead of us. If this is the case, we'll see at least a test of the lower border of the rising green trend channel in the following days.
Summing up the Alert, the euro keeps trading inside its recent consolidation, and the buy signals support a test of the formation's upper border, or even of the recent high and the 38.2% Fibonacci retracement. Should the buyers show weakness there, we'll consider opening short positions. USD/CHF has reversed at the pink resistance zone and the upper border of the rising green trend channel, and the short position remains justified. Should USD/JPY invalidate its breakout above the upper border of the declining grey trend channel, we'll consider opening short positions. Should USD/CAD close today or one of the following sessions below the upper border of its consolidation, we'll consider opening short positions. Apart from these, there're no other opportunities worth acting upon in the currencies. As always, we'll keep you - our subscribers - informed.
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Sunshine Profits - Effective Investments through Diligence and Care

Energy | Oil | Oil Price Report: Oil prices rise as Saudi supply risks come into focus

3 minutes - Source: CNBC

GP: Oil crude pump 190919
A heavy crude oil pump.
Jsmes Hall | EyeEm | Getty Images
Oil prices rose sharply on Thursday, supported by supply risks brought about by last weekend’s drone attacks on Saudi oil infrastructure and a cut in U.S. interest rates.
Brent crude futures gained $1.21 to $64.81 a barrel, while U.S. West Texas Intermediate crude was up 56 cents at $58.75 a barrel.
The attacks knocked down more than half of Saudi Arabia’s crude production and severely limited the country’s spare capacity, a cushion for oil markets in any unplanned outage.
“Global available spare capacity is extremely low at present following the weekend attacks, leaving little room for additional outages, which tends to be price supportive,” UBS oil analyst Giovanni Staunovo said.
Earlier this week Saudi Arabia set out a timeline for a resumption of full operations, saying it had restored supplies to customers at levels prior to the attacks by drawing from its oil inventories.
But it said it would restore its lost production by the end of this month, and bring its output capacity back to 12 million barrels per day by the end of November.
“These plans suggest Saudi Arabia will have no spare capacity for at least the next two and a half months and therefore no way to absorb any further shocks,” consultancy Energy Aspects said.
Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by regional rival Iran.
U.S. President Donald Trump said there were many options short of war with Iran and added that he had ordered the U.S. Treasury to “substantially increase sanctions” on Tehran. Iran has denied involvement in the strikes.
The head of the International Energy Agency said on Wednesday it saw no need to release emergency oil stocks as markets were well supplied.
Following the attacks, Kuwait’s oil sector is on high alert and has raised its security to the highest level as a precaution, a Kuwaiti official said.
The U.S. Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion.
“The Fed rate cut is supporting risk sentiment today, which tends to help crude as well,” Staunovo said.
Separately, weekly data from the Energy Information Administration on U.S. oil inventories provided a mixed snapshot.
Stockpiles of crude in the United States, the world’s largest oil producer, rose by 1.1 million barrels last week against analysts’ expectations for a drop of 2.5 million barrels.
However, stocks in Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018.

Futures & Commodities | Gold | Gold Price Report: Gold gains support from weaker dollar after less-dovish Fed

3-4 minutes - Source: CNBC

GP: Gold and Silver Casting at the Perth Mint 190620
An employee arranges one kilogram gold bars at the Perth Mint Refinery in Perth, Australia, on Aug. 9, 2018.
Carla Gottgens | Bloomberg | Getty Images
Gold prices gained on Thursday, helped by a weaker dollar and as investors looked for clarity on future U.S. interest rates after the Federal Reserve on Wednesday signaled a higher bar to further reductions in borrowing costs.
Spot gold was up 0.2% to $1,497.30 per ounce, after falling to $1,484.16, a one-week low, in the previous session. U.S. gold futures dipped 0.7% to $1,504.90 an ounce.
“The dollar has started to come off and provide some relief (to gold prices) and if so, you’re going to see some buying come in, prices of gold will move higher,” said Alex Turro, market strategist at RJO Futures.
“The outlook as far as Fed Chairman Powell and the Fed is concerned, you’re going to be looking out to October. The committee was divided, the rhetoric really didn’t provide a clear path moving forward as far as the economy is concerned.”
The Fed cut interest rates for the second time this year on Wednesday to help sustain economic expansion, but signaled a higher bar to further reductions as the labor market remained strong.
Helping bullion, the dollar index dipped against a major basket of currencies, as it struggled to gain in the face of the less dovish Fed meeting.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
“They cut rates, the messaging was a little bit more hawkish than the market is anticipating. A major portion of the market is expecting a cut in October or, at least one more before the year end,” said Ryan McKay, a commodity strategist at TD Securities.
However, “longer term you still have overall dovish stance across all central banks.”
Central banks from around the world face increasing pressure to offer monetary support as the U.S.-China trade war hurts global growth.
Gold also witnessed some safe haven demand after Iran warned the United States against any direct combat in the Middle East following an attack on Saudi oil facilities that Washington and Riyadh blamed on Tehran.
Separately, palladium climbed 2% to $1,625.79, hovering close to the record peak of $1,626.81 touched on Monday.
“Palladium is getting an extra bit of the bid as the market becomes less worried about the industrial outlook,” TD Securities’ McKay said.
“The overall optimism on trade has people less concerned on the industrial front but ultimately the positive precious metals environment continues throughout the whole bunch.”
U.S. and Chinese deputy trade negotiators were set to resume face-to-face talks for the first time in nearly two months on Thursday.
Silver edged 0.1% higher to $17.76 an ounce, while platinum rose 0.9% to $938.96.

Press Release: The SEC Adopts New Rules and Amendments under Title VII of Dodd-Frank

12-15 minutes - Source: SEC

Washington D.C., Sept. 19, 2019 —
The Securities and Exchange Commission today announced that it took a significant step toward establishing the regulatory regime for security-based swap dealers by adopting a package of rules and rule amendments under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). These actions establish recordkeeping and reporting requirements for security-based swap dealers and major security-based swap participants and amend the recordkeeping and reporting requirements for broker-dealers. Under these rules, these companies will be required to create and retain fundamental business records to document and track their operations, facilitating the Commission's ability to monitor compliance and reducing risk to the market.
"I once again would like to thank Commissioner Peirce for her excellent leadership of our efforts to stand up the Dodd-Frank Title VII regulatory regime. These rules will help the Commission ensure compliance with rules designed to promote financial responsibility and investor protection," said SEC Chairman Jay Clayton. "Also, I want to thank our colleagues at the SEC, including in the Division of Trading and Markets and the Division of Economic Risk and Analysis, as well as CFTC Chairman Tarbert, Commissioner Quintenz and their colleagues, for their efforts and commitments to inter-agency cooperation."
"With these rules that we finalized, the Commission has taken another important step toward the registration and regulation of security-based swap dealers and major security-based swap participants and the full implementation of the regulatory framework mandated by Congress in Title VII of the Dodd-Frank Act. These rules reflect the hard work of our staff in Trading and Markets and DERA and are the product of ongoing close cooperation with our colleagues at the CFTC, including Chairman Tarbert and Commissioner Quintenz," said SEC Commissioner Hester Peirce.  "I am particularly pleased to see the alternative compliance mechanisms built into the final rule."
These rules address seven key areas:
  • They establish record making requirements for security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs) and amend the existing record making requirements for broker-dealers to account for their security-based swap activities.
  • They establish record preservation requirements for SBSDs and MSBSPs and amend the existing record preservation requirements for broker-dealers to address records relating to their security-based swap activities.
  • They establish periodic reporting and annual audit requirements for SBSDs and MSBSPs and amend the existing reporting requirements for broker-dealers to account for their security-based swap activities.
  • They establish early warning notification requirements for SBSDs and MSBSPs.
  • They establish security count requirements for SBSDs that are not registered as broker-dealers and do not have a prudential regulator (stand-alone SBSDs).
  • They amend the Commission's existing cross-border rule to provide a means to request substituted compliance with respect to the recordkeeping and reporting requirements for SBSDs and MSBSPs.
  • They amend a rule that permits certain SBSDs that are registered as swap dealers and predominantly engage in a swaps business to comply with CFTC requirements in lieu of Commission requirements. The amendment adds the recordkeeping and reporting requirements being adopted today to this alternative compliance mechanism. 
The accompanying fact sheet describes the rules in more detail.
* * *
Final Rules and Amendments
Sept. 19, 2019
The Commission adopted a package of new rules and rule amendments to establish recordkeeping and reporting requirements under Title VII of the Dodd-Frank Act. 
The Scope of the Rules
  • Except as discussed below, SBSDs and MSBSPs that also are registered as broker-dealers will be subject to the existing recordkeeping and reporting rules applicable to broker-dealers: Rule 17a-3 (record making); Rule 17a-4 (record preservation); Rule 17a-5 (periodic reporting and annual audit); Rule 17a-11 (early warning notification); and Rule 17a-13 (security count). Rules 17a-3, 17a‑4, 17a-5, and 17a-11 are being amended to account for security-based swap activities of broker-dealer SBSDs and MSBSPs and of broker-dealers that engage in security-based swap activities but not at a level that requires them to register as an SBSD or MSBSP.
  • SBSDs and MSBSPs that are not also registered as broker-dealers will be subject to Rule 18a-5 (record making); Rule 18a-6 (record preservation); Rule 18a-7 (periodic reporting and annual audit); and Rule 18a-8 (early warning notification). Stand-alone SBSDs will also be subject to Rule 18a-9 (security count).
  • SBSDs that are also registered as OTC derivatives dealers (a special purpose broker-dealer) will be subject to Rule 17a-3 (record making); Rule 17a-4 (record preservation); Rule 18a-7 (periodic reporting and annual audit); and Rule 18a-8 (early warning notification). These firms are subject to Rules 18a-7 and 18a-8 because they will be subject to the capital rule for stand-alone SBSDs (Rule 18a‑1) rather than the capital rule for broker-dealers (Rule 15c3-1).
Record Making Requirements
  • Rule 17a-3 requires a broker-dealer to make and keep current certain financial and accounting records, including blotters itemizing a daily record of all purchases and sales of securities; ledgers reflecting all assets and liabilities, income and expense, and capital accounts; a securities record; and a memorandum of each brokerage order and proprietary securities transaction. This rule has been amended to require broker-dealers (including broker-dealer SBSDs and MSBPS) to make and keep current records relating to their security-based swap activities.
  • New Rule 18a-5 will require non-broker-dealer SBSDs and MSBSPs to make and keep current financial and accounting records and records relating to their security-based swap activities.  Rule 18a-5 is more narrowly tailored than Rule 17a-3, particularly with respect to the requirements for bank SBSDs and MSBSPs.
Record Preservation Requirements
  • Rule 17a-4 prescribes the period of time the records required to be made and kept current under Rule 17a-3 must be preserved and the manner in which the records must be preserved. It also identifies additional types of records that must be preserved if the record is made or received by the broker-dealer (e.g., written communications and agreements relating to the broker-dealer’s business). This rule has been amended to prescribe the time periods that the new security-based swap records required under Rule 17a-3 must be retained by broker-dealers (including broker-dealer SBSDs and MSBSPs) and to subject these records to the other preservation requirements in the rule (e.g., requirements relating to storing records electronically and promptly producing records to the Commission).
  • New Rule 18a-6 prescribes the period of time the records required to be made and kept current under new Rule 18a-5 must be preserved by non-broker-dealer SBSDs and MSBSPs and the manner in which the records must be preserved.  New Rule 18a-6 also identifies additional types of records that must be preserved (e.g., written communicationsand agreements relating to the firm’s business) if the record is made or received by the non-broker-dealer SBSD or MSBSP.
Periodic Reporting and Annual Audit Requirements
  • Rule 17a-5 has two main components: (1) a requirement that broker-dealers periodically (monthly or quarterly) file an unaudited FOCUS Report containing information about their financial and operational condition, including a balance sheet, income statement, and capital and segregation computations; and (2) a requirement that broker-dealers annually file financial statements and certain reports audited by a Public Company Accounting Oversight Board (PCAOB)-registered accountant in accordance with PCAOB standards (annual audited reports). The FOCUS Report Part II has been amended to, among other things, elicit information about the capital and segregation computations of nonbank SBSDs and MSBSPs and to elicit information about security-based swap and swap transactions and positions of broker-dealers and nonbank SBSDs and MSBSPs. Rule 17a-5 will require broker-dealers (including broker-dealer SBSDs and MSBSPs) to file the amended FOCUS Report Part II. Rule 17a-5 will require broker-dealer SBSDs and MSBSPs to file the annual audited reports (just as the rule currently requires broker-dealers to file these reports).
  • New Rule 18a-7 will require non-broker-dealer SBSDs and MSBSPs to file the amended FOCUS Report Part II or, in the case of bank SBSDs and MSBSPs, the new FOCUS Report Part IIC. The FOCUS Report Part IIC is more limited than the amended FOCUS Report Part II and will require bank SBSDs and MSBSPs to report certain information about their financial condition (largely drawn from the information they file with the prudential regulators) and information about their security-based swap activities. New Rule 18a-7 will require stand-alone SBSDs and MSBSPs to file annual audited reports. Bank SBSDs and MSBSPs will not be required to file annual audited reports.
Early Warning Notification
  • Rule 17a-11 specifies circumstances under which a broker-dealer must notify the Commission and other regulators about adverse changes in the firm's financial or operational condition. For example, the rule requires a broker-dealer to provide notice when, among other things, its net capital falls below 120% of the minimum required amount or below the minimum required amount, when the firm fails to make and keep current the books and records required by Commission rules, or when a broker-dealer discovers or is notified by its accountant of a "material weakness" as defined in Rule 17a-5.  Rule 17a-11 has been amended to require notice if the broker-dealer (including a broker-dealer SBSD or MSBSP) fails to make a required deposit into the security-based swap customer reserve account (i.e., fails to comply with this security-based swap segregation requirement).
  • New Rule 18a-8 establishes notification requirements for non-broker-dealer SBSDs and MSBPs when, for example, their capital levels fall below required amounts, they fail to make required books and records, or they fail to make required deposits into their security-based swap customer reserve accounts.
Security Counts
Rule 17a-13 requires a broker-dealer on a quarterly basis to examine and count the securities it physically holds, account for the securities that are subject to its control or direction but are not in its physical possession, verify the locations of securities under certain circumstances, and compare the results of the count and verification with its records. Broker-dealer SBSDs and MSBSPs will be subject to this rule.  New Rule 18a-9 will require stand-alone SBSDs to perform a quarterly securities count.
Alternative Compliance Mechanism
Rule 18a-10 provides that an SBSD that is not a registered broker-dealer and is registered as a swap dealer and predominantly engages in a swaps business may elect to comply with the capital, margin and segregation requirements of the Commodity Exchange Act and the CFTC's rules instead of complying with the capital, margin, and segregation rules of the Commission if certain conditions are met.  This rule has been amended to provide that the SBSD also may elect to comply with the recordkeeping and reporting requirements of the Commodity Exchange Act and the CFTC’s rules instead of complying with the recordkeeping and reporting rules of the Commission.
Cross-Border Application
The Commission’s cross-border rule has been amended to permit foreign SBSDs and MSBSPs to avail themselves of substituted compliance to satisfy the recordkeeping and reporting requirements.
What’s Next?
The rules will become effective 60 days after publication in the Federal Register. The compliance date for the rule amendments and new rules is 18 months after the effective date of any final rules addressing the cross-border application of certain security-based swap requirements.

Press Release: The FTC Returns More than $2.2 Million to Vemma Affiliates Who Lost Money

2-3 minutes - Source: FTC

The FTC will be mailing refund checks totaling more than $2.2 million to people who lost money to an alleged pyramid scheme operated by Vemma Nutrition Company.
The refunds are the result of the FTC’s settlement with Vemma, an Arizona-based multilevel-marketing company that sold health and wellness drinks through a network of distributors known as “affiliates.” Vemma allegedly targeted college students and other young adults with materials that presented its affiliate program as a profitable alternative to traditional employment, but failed to disclose that the program’s structure ensured that most affiliates would not earn substantial income. The FTC alleged that the program operated as a pyramid scheme that compensated participants mainly for recruiting others rather than for retail sales based on legitimate consumer demand for the products.
As part of the settlement, the FTC will be sending 28,224 checks averaging $78.93 to victims of the alleged scheme. The checks will expire after 60 days, as indicated on the check. The FTC urges people to cash them before they expire. The FTC never requires consumers to pay money or provide account information to cash a refund check.
Consumers who have questions about the refunds should contact the refund administrator, JND Legal Administration, at 1-833-759-2980. To learn more about the FTC’s refund programs, visit
The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.

Europe | Europe Markets Closing Report: European markets close higher amid Fed easing; Bank of England holds rates

Sam Meredith

European stocks closed higher Thursday, after the U.S. Federal Reserve cut interest rates as expected but signaled a higher threshold to further policy easings.
The pan-European Stoxx 600 closed provisionally up 0.6%, with most sectors and major bourses in positive territory.

European Markets: FTSE, GDAXI, FCHI, IBEX

Looking at individual stocks, Britain’s IG Group surged to the top of the European benchmark after the company said it expects to return revenue growth in 2020. Shares of the online trading platform rose over 10% on the news.
Sticking with British stocks, Next tumbled toward the bottom of the index after reporting first-half results. The clothing chain posted a 2.7% rise in profit during the first six months of the year, but said the first few weeks of its fall season had been disappointing. Shares of the London-listed stock dipped 5%.
The Bank of England (BOE) held interest rates steady on Thursday, as Brexit uncertainty continues to hang over the world’s fifth-largest economy.
With less than 45 days to go before the is set to leave the European Union, the BOE’s nine-member Monetary Policy Committee (MPC), led by Mark Carney, unanimously voted to hold interest rates at 0.75%. Sterling was little changed on the news.

Central banks

On Wall Street, stocks were higher amid gains in the tech sector. The Dow Jones Industrial Average rose 100 points while the Nasdaq and S&P 500 indexes were also in positive territory.
The Fed announced Wednesday that it would take down its benchmark overnight lending rate to a target range of 1.75% to 2%, but offered few indications that further reductions are ahead — with members split on what to do next.
Easier monetary policy has generally supported equities, but a split vote from the U.S. central bank raised concern about predicting the future path for interest rates in the world’s largest economy.
Central banks around the world have been loosening policy to counter the risk of low inflation and recession. On Thursday, the Bank of Japan held interest rates steady, as widely expected, but signaled it could ease next month.
U.S.-China trade talks are also in focus, with officials on either side set to meeting in Washington later in the day. The two-day negotiations are aimed at preparing for high-level talks in early October, which will determine whether Washington and Beijing can progress toward a deal and avoid higher tariffs.
— Reuters contributed to this report.

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves premarket: AT&T, Microsoft, Darden Restaurants, Tesla & more

Peter Schacknow

Check out the companies making headlines before the bell:
Darden Restaurants – The parent of Olive Garden and other restaurant chains reported adjusted quarterly profit of $1.38 per share, a penny a share above estimates. Revenue came in just below forecasts. Comparable-restaurant sales were up 0.9%, shy of the 1.3% increase forecast by analysts surveyed by Refinitiv.
Microsoft – Microsoft raised its quarterly dividend by 5 cents a share to 51 cents per share, an increase of 11%. The tech giant also announced a stock buyback program of as much as $40 billion.
AT&T – AT&T is exploring a separation of its DirecTV unit, according to people familiar with the matter who spoke to the Wall Street Journal. The company is said to have considered a spin-off into a separate public company, and a combination of DirecTV’s assets with rival satellite TV operator Dish Network. However, sources tell Reuters that AT&T has not talked to Dish due to regulatory concerns, and CNBC’s Andrew Ross Sorkin reports no AT&T action on DirecTV is imminent.
Beyond Meat – The plant-based burger maker was rated “overweight” in new coverage at Barclays, which said Beyond Meat is a well-positioned company that could capture a significant share of the alternative meat market.
U.S. Steel – The steelmaker cut its current-quarter guidance, pointing to a larger-than-expected drop in steel prices and deteriorating market conditions in Europe.
Tesla – Tesla’s Model 3 earned the top safety rating from the Insurance Institute For Highway Safety, the first Tesla model to do so.
Diageo – Diageo said it expects to meet its full-year organic sales targets, although the spirits producer also said it is “not immune” to global trade policy changes.
Facebook – Facebook CEO Mark Zuckerberg will be on Capitol Hill for private meetings with policymakers today, after a dinner meeting with a handful of U.S. senators Wednesday night. The social media giant has been coming under increasing scrutiny in Washington over its privacy and marketing practices.
Deutsche Bank – Deutsche Bank officials have discussed adding billions more in problematic assets to a so-called “bad bank” unit it created earlier this year, according to bank sources who spoke to Reuters. The idea is said to depend on whether the bank is able to sell assets already held within the “bad bank.”
Datadog – Datadog goes public today after pricing its initial public offering at $27 per share. The data analytics company turned down a more than $7 billion takeover bid from Cisco Systems as it prepared to go public, according to a Bloomberg report.
RH – RH raised its adjusted full-year earnings per share guidance to $10.78 to $11.01 per share from the prior $10.53 to $10.76 a share. That moves guidance above the current consensus of $10.71 for the company formerly known as Restoration Hardware. RH attributes the change to the closing of a $350 million convertible notes offering, which allows the company to retire other debt.
Herman Miller – Herman Miller reported adjusted quarterly earnings of 84 cents per share, 6 cents a share above estimates. The office furniture maker’s revenue was also above forecasts and the company gave upbeat current-quarter guidance.
Brown-Forman – Evercore downgraded the spirits producer to “underperform” from “in line,” saying while it is a well-run company with iconic brands, it is a “valuation outlier.”

Business News: U.S. Chinese trade deputies face off in Washington amid deep...

David Lawder

WASHINGTON (Reuters) - U.S. and Chinese deputy trade negotiators were set to resume face-to-face talks on Thursday for the first time in nearly two months as the world’s two largest economies try to bridge deep policy differences and find a way out of a bitter and protracted trade war.
FILE PHOTO: Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. REUTERS/Aly Song/File Photo/File Photo
The negotiations on Thursday and Friday are aimed at laying the groundwork for high-level talks in early October that will determine whether the two countries are working towards a solution or are headed for new and higher tariffs on each other’s goods.
A delegation of about 30 Chinese officials, led by Vice Finance Minister Liao Min, were set to launch talks on Thursday morning at the U.S. Trade Representative’s (USTR) office near the White House. The U.S. side is expected to be led by Deputy USTR Jeffrey Gerrish.
The discussions are likely to focus heavily on agriculture, including U.S. demands that China substantially increase purchases of American soybeans and other farm commodities, a person with knowledge of the planned discussions told Reuters.
Two negotiating sessions over the two days will cover agricultural issues, while just one will be devoted to texts covering core changes to strengthen China’s intellectual property protections and end the forced transfer of U.S. technology to Chinese firms.
“Sessions on agriculture will get a disproportionate amount of air time,” the source said, adding that one of these sessions also will include a focus on U.S. President Donald Trump’s demand that China cut off shipments of the synthetic opioid fentanyl to the United States
Trump is eager to provide export opportunities for U.S. farmers, one of his key political constituencies who have been battered by China’s retaliatory tariffs on U.S. soybeans and other agricultural commodities.


U.S. Treasury Secretary Steven Mnuchin, who will participate in the October talks along with USTR Robert Lighthizer and Chinese Vice Premier Liu He, has said that currency issues will be a focus of the new rounds of talks.
Mnuchin formally declared China a currency manipulator last month after the yuan slipped below 7 to the dollar, accusing Beijing of pushing its currency lower to gain a trade advantage.
Trump has said that China failed to follow through on agricultural purchase commitments made by its president, Xi Jinping, at a G20 leaders summit in Osaka, Japan as a goodwill gesture to get stalled talks back on track. China has denied that such commitments were made.
When such purchases failed to materialize during U.S.-China trade talks in late July, Trump quickly moved to impose 10% tariffs on virtually all remaining Chinese imports untouched by previous rounds of tariffs.
But in an easing of tensions last week, Trump delayed a scheduled Oct. 1 tariff increase on $250 billion worth of Chinese imports until mid-month, as China postponed tariffs on some U.S. cancer drugs, animal feed ingredients and lubricants.
Beijing also is seeking an easing of U.S. national security sanctions against telecom equipment maker Huawei Technologies, which has been largely cut off from buying sensitive U.S. technology products.
The trade war, which has dragged on for 14 months, has rattled financial markets as policymakers and investors worry about the broadening global economic fallout of the dispute.
The specter of a global recession has prompted central banks around the world to loosen policy in recent months. The Federal Reserve on Wednesday cut rates for the second time this year, saying the reduction provided “insurance against ongoing risks” including weak world growth and resurgent trade tensions.


Trade experts, executives and government officials in both countries say that even if the September and October talks produce an interim deal that includes purchases and a reprieve for Huawei, the U.S.-China trade war has hardened into a political and ideological battle that runs far deeper than tariffs and could take years to resolve.
Jon Lieber, a principal in PwC’s national tax services practice, said a possible “very narrow agreement” in October would do little to solve fundamental differences between the two countries.
To keep markets steady, the two sides could well “string along the talks for a longer period of time,” he added.
Representative Kevin Brady, the top Republican on the House Ways and Means Committee, told reporters on Wednesday that he was cautiously optimistic about the talks.
While he is no fan of tariffs, Brady said Trump was right to challenge China’s trade actions.
“Zero is always best, but there is a necessity to change the whole trading relationship with China.”
Reporting by David Lawder and Andrea Shalal; Editing by Shri Navaratnam

U.S. Market | Futures Indicator: US futures point to slightly lower open after Fed cuts rates

Silvia Amaro

U.S. stocks were set to open slightly lower Thursday morning.
At around 1:44 a.m. ET, Dow futures fell 50 points, indicating a negative open of more than 53 points. Futures on the S&P and Nasdaq were also trading lower.
Wall Street ended Wednesday’s session little changed after the Federal Reserve did not match market expectations of further rate cuts this year. The central bank cut the overnight rate by 25 basis points on Wednesday. This is the second time this year the Fed has lowered rates.
Money managers are following a new round of face-to-face talks between Chinese and American officials, starting in Washington later Thursday.
In terms of data, there will be jobless claims and current account numbers due at 08:30 a.m. ET, and existing home sales due at 10:00 a.m. ET.
On the earnings front, Darden Restaurants, Scholastic and Steelcase will be reporting.

Asia | Asia Markets Closing Report: Asia stocks mostly higher as Fed cuts rate; Bank of Japan keeps monetary policy steady

Eustance Huang

Stocks in Asia were mostly higher on Thursday after the U.S. Federal Reserve cut interest rates overnight — but the U.S. central bank appeared divided on its next course of action for the year.
Mainland Chinese stocks were up on the day, with the Shanghai composite higher by 0.46% at about 2,999.28 and the Shenzhen component gaining 1.01% to 9,852.20. The Shenzhen composite added 1.028% to approximately 1,672.63.
Hong Kong’s Hang Seng index, however, fell 1.07% to close at about 26,468.95. Shares of life insurer AIA dropped 3.04%.
In Japan, the Nikkei 225 rose 0.38% to close at 22,044.45 while the Topix index added 0.56% to end its trading day at 1,615.66. Over in South Korea, the Kospi closed 0.46% higher at 2,080.35 as shares of Samsung Electronics surged 3.04%.
Australia’s S&P/ASX 200 also rose 0.54% to finish its trading day at 6,717.50. Data released by the Australian Bureau of Statistics showed the country’s trend unemployment rate increased to 5.3% in August.
Following the employment data release, the Australian dollar traded at about $0.6787 after seeing highs above $0.684 in the previous session.
Overall, the MSCI Asia ex-Japan index shed 0.51%.

NIKKEINikkei 225 IndexNIKKEI22044.4583.740.38
HSIHang Seng IndexHSI26468.95-285.17-1.07
ASX 200S&P/ASX 200ASX 2006717.5035.900.54
KOSPIKOSPI IndexKOSPI2080.359.620.46
CNBC 100CNBC 100 ASIA IDXCNBC 1008010.76-15.80-0.20

Central bank watch

The moves regionally on Thursday came as investors reacted to a series of recent moves by central banks across the globe.
The Fed cut its benchmark overnight rate by 25 basis points to a range of 1.75% to 2%, a move that was widely expected. It is the second time this year the central bank has lowered rates.
The Fed was, however, divided in its decision to lower rates, with three officials dissenting. Central bank officials are also split on further action this year. Five Fed members wanted to keep rates unchanged while five others supported lowering them to the current range and keeping them there. Seven others wanted at least one more rate cut.
The September Federal Open Market Committee (FOMC) statement, members’ votes and the updated policy rate projection reflect a “significant divergence” in view among the FOMC members, J.P. Morgan Asset Management Asia Chief Market Strategist Tai Hui wrote in a note. “This reflects the uncertain nature of the U.S. economic outlook.”
“We still believe risk is skewed to more rate cuts before the end of 2019, as part of the “insurance cut,”″ he said. “The progress of the US-China trade negotiation remains slow and this will continue to weigh on business sentiment. One important question is whether this cautious mood would eventually spillover into hiring decisions or slowdown wage growth.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.453 after touching an earlier high of 98.623.
Following the Fed decision, the Hong Kong Monetary Authority announced Thursday it adjusted its base rate downward by 25 basis points to 2.25%.
The Bank of Japan (BoJ) kept monetary policy steady on Thursday. In an expected move, the BoJ maintained its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%.
In its statement on monetary policy, the Japanese bank said “it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost,” in reference to the BoJ’s ever elusive 2% inflation target.
“The Bank will reexamine economic and price developments at the next (Monetary Policy Meeting), when it updates the outlook for economic activity and prices,” the BoJ said.
Following that decision, the Japanese yen traded at 108.06 against the dollar after seeing an earlier low of 108.46.
Oil prices rose in the afternoon of Asian trading hours, with international benchmark Brent crude futures up 0.63% to $64.01 per barrel and U.S. crude futures gaining 0.33% to $58.3 per barrel.
— Reuters, along with CNBC’s Fred Imbert, contributed to this report.