HSBC’s former head of global forex cash trading was just found guilty of front-running a $3.5 Billion trade. There’s actually a recording that was heard in court of Mark Johnson saying “oh f***ing Christmas” when he learned that the trade would go through. Front-running is a huge issue across the world of finance and it is fraud. The idea is that if you have a client who’s about to make a large trade you get your small trade out just in front of him and take advantage of the price move. This is one of the issues that blockchain will be able to fix quite easily if/once it reaches mass adoption.
Market Overview
Stocks on Wall Street actually went down yesterday. A rare sight these days but it still happens every once in a while. Though they did end up down, they were able to reach new record highs before the declines.
For the Dow Jones, this marks the first losing session in almost two weeks and the fourth losing session so far this month. Even though the declines are small it has many market commentators [half-jokingly] screaming “buy the dip!”
Analysts are still arguing about whether or not the increasingly likely tax reforms are priced into the markets, but they also have their eyes on the individual stocks in this particularly interesting earnings season.
A critical vote will happen in the US House of Representatives that should allow Trump to enact his tax plan without Democratic support.
More than 120 companies are expected to announce their Q3 earnings reports today so things may get a bit volatile.
Slippery Sterling
Yesterday the Deputy Governor at the Bank of England Jon Cunliffe cast some FUD on the upcoming rate hike announcement.
He says that the timing just might not be right for a hike next week. The Pound did see a small dip on this statement but it quickly recovered.
Jon’s comments clearly run contrary to the views of the rest of the markets. After all, Mark Carney is the one to make the final decision on rates and he seemed fairly confident about an impending hike during the BoE’s last meeting on September 14th.
Market expectations have also not changed much since that last meeting and remain solid with an 82% chance of a hike on Thursday the 2nd. So mark your calendar.
Crypto-contrary
The Crypto Market has been seeing a lot of action lately. However, the headline market cap, which is the value of all cryptos in circulation has remained fairly stable over the past week and a half (blue) just below the all time highest levels of September 2nd (black).
The main battle has been between bitcoin and the rest. We’re very often seeing bitcoin in the green with everything else in red and then vice versa. This is in stark contrast to what we saw throughout September when all the cryptocurrencies were sharing a tight correlation.
For those of you who are in it for the long term, don’t worry about this short term drama. A well-diversified portfolio should be all you need.
