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US to put $11m of seized SilkRoad bitcoin under the hammer
FinTech
<p>Next month U.S. Marshals will auction off just over 44,000 bitcoins - worth $10.7 millon - seized after the arrest of SilkRoad founder Ross Ulbricht (AKA Dread Pirate Roberts) in 2013.</p> <p>SilkRoad was the darknet marketplace that gave bitcoin so much of its early notoriety. Bitcoin was used by SilkRoad visitors to trade in various contraband items, mostly drugs. The site generated $1.2 billion in revenue in just two years of operation.</p> <p>The sale, announced on U.S. Marshals site, will be in November, between 8 am and 2pm EST. The bitcoins will be sold in 21 blocks of 2000, plus an additional block of 2,341. Potential bidders are able register using a form available on the site. Bidders need to register by November 2 and winners are notified on November 6.</p> <p>In total, more than 144,000 bitcoins (then worth $122 million) were seizen from Ulbricht. The other 100,000 have been liquidated by the agency in two other public auctions.</p> <p>Photo: Antana</p> <p>&nbsp;</p>
The case for gold to protect clients’ wealth shorting the Federal Reserve
Asset Management
<p>“I’ve never let my guard down by saying, I do not need to be hedged” - Paul Singer</p> <p>Preservation of clients’ wealth is the most important fiduciary duty guiding investment managers. This obligation is under-appreciated in the midst of financial asset bubbles when recency bias blunts the need to sacrifice potential gains in exchange for protection against losses. Inevitably, this is made painfully clear when a bubble pops and those once-popular assets lose value and the manager’s clientele suffer. As valuations are stretched on the back of reckless Federal Reserve monetary policy and poor economic fundamentals, caution is paramount.</p> <p>This article presents the case for an asset that will help managers protect their clients and uphold their fiduciary duty owed to them. I’ll explain why gold is a powerful hedge that will protect your clients’ wealth, but first I’ll look at the history of trade and currencies and how gold evolved to become a global store of wealth.</p> <p>Gold - ?g?ld AU #79 - A heavy yellow elemental metal of great value</p> <p>Gold is neither a claim on the promise of future earnings like a stock, nor a liability owed by a public institution or a private party like a bond. It also lacks the full faith and credit of most governments that a currency has. Gold serves little industrial purpose, unlike all other commodities, and is most commonly revered as a shiny metal used in ornamental display or jewelry.</p> <p>But it is precisely these failings that make gold a unique and valuable asset and one that can play an important role in portfolio construction.</p> <p>Gold is one of the few stores of value that is limited in supply, transportable, globally appreciated and not contingent upon the faith and credit of any entity. It cannot be manufactured or debased. Gold is the only time-honored currency, or in the words of John Pierpont Morgan (J.P. Morgan), “Gold is money; everything else is credit.”</p> <p>History </p> <p>Thousands of years ago trade began through a system of barter. This method of payment was effective but very limiting. Trade could not occur unless both parties had the goods or services demanded by the other. If a metalsmith, for example, did not need wheat, a farmer seeking a new sickle would have to find alternative goods or services to offer the metalsmith.<br /> These stark limitations and the growing desire to conduct trade with parties over greater distances required a more robust system. Accordingly, trade graduated from the barter system to that of a common currency. Aristotle stated the rationale for a common currency eloquently: “When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use.”</p> <p>At first, in almost all cases, the currency was a commodity. While eliminating some of the problems associated with barter, this system presented new ones. Carrying gold or other commodities such as silver, grain, shells or livestock can be cumbersome and difficult to properly measure for weight and purity. Dividing most commodities into fractions for ease of exchange produced additional difficulties. Paying for an acre of land with a quarter of a cow m</p>
Daily Scan: Asia ends on a high, oil prices boost global stocks
Capital Markets
<p>Updated throughout the day</p> <p>October 7</p> <p>Good Evening. Asia finished on a high today as climbing oil prices bolstered energy stocks. Hong Kong's Hang Seng Index  got a 2.3% boost after China revealed that foreign-exchange reserves fell at a slower pace in September. Japan's Nikkei Stock Average meanwhile held out, gaining 0.8%, even after stocks struggled earlier in the day following the Bank of Japan's decision to keep its policy unchanged. There are still hopes that easing measures will be brought in at the end of the month.</p> <p>European markets have also been encouraged by rising oil prices, the Stoxx Europe 600 rose 0.3% in early trade while energy shares soared 1.5.%. The brent crude was up nearly 1% to $52.95 a barrel, on expected production cuts in the US and global markets.</p> <p>Here is what else you need to know:</p> <p>US orders Bank of China to hand over counterfeit ring data. A New York judge has ordered the Bank of China to hand over detailed information about Chinese bank accounts used by a counterfeiting ring that allegedly sold millions of dollars of fake Gucci handbags and wallets in the United States. South China Morning Post (paywall)<br /> AB InBev makes $104 billion bid for rival brewer. Anheuser-Busch InBev, the world’s largest brewer, launched an improved offer for SABMiller on Wednesday, offering just over 68 billion pounds ($104 billion) for its largest rival to extend its reach into Africa and other markets. South China Morning Post (paywall)<br /> Dollar falls to upper 119 yen zone after BOJ stands pat. Some market players had expected the central bank to decide on additional easing that could weaken the yen. Nikkei<br /> Samsung flags nearly 80% jump in Q3 operating profit. Samsung Electronics Wednesday flagged a nearly 80% jump in its third-quarter operating profit, which analysts put down to a weaker Korean currency and improved sales of televisions and semiconductors. Asia One</p> <p>IMF warns on worst global growth since financial crisis. The world economy will this year grow at its slowest pace since the global financial crisis, the International Monetary Fund said on Tuesday, with a deep slowdown in China and other emerging economies masking a strengthening recovery in rich countries. The Financial Times (paywall)<br /> Hong Kong panda Ying Ying suffers miscarriage. Giant panda Ying Ying was due to give birth to Hong Kong's first giant panda cub. Doctors at the Ocean Park amusement park said they are very disappointed as they have been trying for four years to get Ying Ying pregnant. BBC<br /> Thailand to push for Asean-level efforts to rein in haze. Thailand has said it will push for Asean-level efforts to rein in the haze that comes from smoke-belching fires in neighbouring countries. Straits Times<br /> MSF demands Afghan war crimes probe. </p>
Daily Scan: Stocks waver; 6000 inmates go free
Capital Markets
<p>Updated throughout the day</p> <p>October 6</p> <p>Good evening. The global markets wavered Tuesday after a series of steady gains. The Dow rose just 0.1% after slight ups and downs throughout the day. The S&amp;P 500 dropped 0.4% and the Nasdaq fell 0.7%. The Stoxx Europe 600 gained 0.6%. The energy sector rallied, and oil was up, creeping close to $49/barrel. In an attempt to placate investors, Glencore disclosed more financial information about its company, but didn't answer many questions.</p> <p>Here is what else you need to know:</p> <p>About 6,000 inmates to go free. The US federal Bureau of Prisons will give earl release to about 6,000 inmates beginning this month. The largest release in the prison bureau's history will benefit drug offenders given harsh sentences that are no longer in effect. Thousands more could be freed. The releases are not automatic, and are being considered on a case by case basis. About one-third of the 6,000 inmates are not US nationals and will be turned over to immigration officials. CNN</p> <p>Europe-US data transfer shutdown. The highest EU court ruled that the Safe Harbour system that allows them to transfer data between the US and Europe is invalid. Data transferred between international offices includes HR information, payroll, and online advertising data. The court says that Safe Harbour doesn't protect EU citizen's personal information, as the US national security laws can trump the privacy safeguards in the system. Reuters</p> <p>Women in ISIS slavery commit suicide to escape. Maybe hundreds of captured women, including the Yazidi Iraqi minority, are killing themselves to escape ISIS. ISIS claims that the Quaran justifies taking non-Muslim women into slavery and allows their rape. Thousands of Yazidis women and girls were captured and the men murdered when ISIS took captured Mosul. CNN</p> <p>Ex-UN General Assembly president nailed for bribery. U.S. authorities have charged John Ashe, UN ambassador from Antigua and Barbuda, with taking more than $1.3 million in bribes from Chinese businessmen. Five others involved in the alleged bribery have been arrested. Reuters</p> <p>BP in $20b settlement over fatal US oil spillage. Oil giant BP has agreed to pay $20 billion to settle claims with the US stemming from the company's Deepwater Horizon oil spill. An explosion on BP's deep-water drill, off the coast of Louisiana in 2010 killed 11 workers. Millions of barrels of oil were spilled into the surrounding waters. BBC</p> <p>Hong Kong uni protests over academic freedoms. Around 2,000 protesters at Hong Kong University marched Tuesday to support academic freedom as fears grow that Beijing is interfering in the city's education system. Channel News Asia<br /> NATO denounces Russian incursion into Turkish airspace. The U.S. and NATO denounced have Russia for violating Turkish airspace along its frontier with Syria, and Ankara threatened to respond if provoked again, raising the prospect of direct confrontation between the </p>
Paul Tudor Jones says Fed constrained by debt
Hedge Funds
<p>Paul Tudor Jones echoed a whisper concern in a Bloomberg TV interview this morning, saying that the U.S. Federal Reserve is restraining itself from raising interest rates because such a move would increase government interest payments. The observation that the Fed was focusing on debt management rather than overall economic conditions, putting yet another mandate in play as a determinant as to when it should raise interest rates, is an issue most often verbalized in private, which makes the public comments even more noteworthy.</p> <p>Paul Tudor Jones: Acknowledgement of government debt a much larger macro issue<br /> With over $18 trillion in government debt, or $154,480 per taxpayer, the interest payments on government debt can be significant. In 2014, for instance, with rates at historic low levels, interest on the debt consumed 7 percent of the budget deficit, the third largest independent line item. “I think it's kind of acknowledging to me a much larger macro issue, which is if you think about the last 50, 60 years,” the Tudor Investment Corporation founder best known in quantitative investment circles for his mathematical approach to problems, said in an interview with Stephanie Ruhle and David Westin. While he was on the show speaking about his cause of choice, JUST Capital, which seeks to provide economic incentive for positive corporate behavior, it is the economics of debt and negative incentives that are concerning him.</p> <p>“There's is a perfect negative correlation between the interest income paid by the Federal government and interest rates,” meaning higher interest rates increase government debt, he said, implying a wider array of corollary impacts. “So the higher the share of GDP that's paid in interest income by the Federal government, typically that correlates high interest rates also. So what the Fed is doing is recognizing there is a tail risk with low interest rates. There's a tail risk with zero. We seem to run perpetual deficits…”</p> <p>The debt problem isn’t just one of the current gap in spending, but with historic levels of seniors retiring, the unfunded liabilities gap is approaching $100 trillion, or $827,000 per taxpayer.<br /> Paul Tudor Jones: Size of balance sheet creates "uncomfortable" situation<br /> Those with their hands on the economic policy steering wheel are “uncomfortable” with the size of the balance sheet. “They're concerned about the expanding global debt-to-GDP.” While concern exists, there appears a yearning to “normalize” interest rates. “I think they're trying to probably insert </p>
New player adds tactical sophistication to robo-advisor landscape
FinTech
<p>Robo-advisors are still a small percentage of the overall wealth management industry, but there is no denying the rapid growth of these online-based money managers.</p> <p>That rapid growth is paving the way for new entrants to the robo-advisor field, including New York-based Huygens Capital LLC, which describes itself as “a systematic, tactical, ETF strategist and robo advisor enabled by proprietary predictive analytics.”</p> <p>Huygens is launching its tactical, risk-focused robo-advisor Monday, and it appears to be a well-timed entry into the robo-advising space. As of December 2014, the 11 largest robo-advisors had a combined $19 billion in assets under management, representing eight-month asset growth of 65 percent, according to Wealth Management.</p> <p>That number has continued surging.</p> <p>Read more at Benzinga. <br /> Photo: Peyri Herrera</p>
Banks around the world unite to explore the use of Blockchain
FinTech
<p>Financial tech firm R3 has created an initiative under which some of the world's largest banks will explore the use of blockchain in the financial sector. The effort represents the first time major banks have joined forces to research how blockchain may influence the sector and improve operations.</p> <p>This week, several big name banks including HSBC Holdings plc (ADR) HSBC, Deutsche Bank AG DB, Citigroup Inc C and Bank of America Corp BAC all signed on to the consortium, which is headed up by David Rutter, the former CEO of ICAP Electronic Trading.</p> <p>Blockchain For Markets</p> <p>The banks are planning to research how blockchain can revolutionize financial markets and whether or not implementing the ledger-like technology would be beneficial. Many believe that financial institutions would benefit from blockchain as the system would make their operations more efficient and increase transparency. Blockchain ledgers are able to keep track of every transaction, and integrating that system within financial institutions around the world would make it easier for banks to monitor cross-border payments and interact with each other.<br /> Smart Contracts<br /> Blockchain could also be used to facilitate contract transactions as the system would have the ability to recognize whether or not conditions have been met. Deutsche Bank has been working on this initiative in order to issue corporate bonds through a blockchain-powered smart contract system.<br /> Security Concerns<br /> Of course, as blockchain is a relatively new technology, there are concerns regarding the safety and security of such a system. Several hacking attacks have given bitcoin, the cryptocurrency that runs on blockchain, a bad name and could lead to resistance from the public. However, R3 is hoping that through collaboration within the financial sector, the risks associated with blockchain-powered systems will be addressed and the technology can be used to move the industry forward.</p> <p>This story first appeared in Benzinga.<br /> Photo: 401(K) 2012</p>
Standard Chartered launches FinTech Accelerator Program
FinTech
<p>Standard Chartered launched a new SuperCharger FinTech Accelerator Program in Hong Kong today. In a unique collaboration, the UK bank has partnered with fellow-heavyweights Baidu, China’s top internet search engine, and TusPark Global Network which has already incubated 19 companies in its technology parks that have subsequently listed.</p> <p>The venture aims to encourage innovation and entrepreneurship by helping local and international early-stage as well as more established FinTech companies grow in Asia’s dynamic markets.</p> <p>Technopreneurs will be part of a structured curriculum and receive coaching and mentoring from Baidu’s technologists, Standard Chartered’s bankers together with venture capitalists and industry experts to refine their business model, develop market entry strategies, navigate the regulatory landscape and identify joint ventures opportunities.</p> <p>“Hong Kong’s vibrant international financial ecosystem as well as strategic location as a gateway to China, one of the world's largest FinTech market opportunities, makes it the perfect place to co-create the future of financial services with technopreneurs at the intersection of finance and technology,” said Ericson Chan, Standard Chartered’s regional chief information officer, Greater China and North Asia.</p> <p>The program kicks off today with a call for technopreneurs to come forward with their business ideas. Applications will close on 20 November 2015. Throughout October, a roadshow will travel in search of the best businesses worldwide with stops including London, New York, Tel Aviv, Singapore and Beijing.</p> <p>Between January and April selected businesses will then have the chance “to explore cross-pollination of ideas between other verticals such as IoT, media and hardware, located within this world-class innovation hub,” said Standard Chartered in a statement.<br /> Photo: Thomas Fan</p>
The 10 big challenges for emerging market start-up ecosystems by Dave McClure
Venture Capital
Dave McClure, co-founder of global accelerator 500 startups, recently put out a slideshow listing some of the  challenges faced by emerging market startup ecosystems. The slides accompanied a talk at  StartupIstanbul, a four-day event that took place at the beginning of the month. It is no surprise that McClure has a few things to say about emerging markets, his  firm is
Green shoots in China?
Capital Markets
<p>Those who follow our posts know that we see considerable secular growth potential in China. This view was again affirmed during my most recent trip to Hong Kong last month, where members of our team had the opportunity to meet with management teams throughout Asia that are benefiting from secular growth trends as they navigate near-term cyclical pressures. The country’s geopolitical aspirations (including its bid to internationalize the renminbi), as well as its commitment to transition its economy from public sector and investment-led growth to private sector and consumption-led growth are likely to provide many opportunities for long-term investors.<br /> In addition to this longer-term lens, we also consider risk/reward from short- and intermediate-term perspectives. In the third quarter, our focus on managing near-term volatility contributed to our decision to underweight China. However, as we enter the fourth quarter, we are starting to see some of signs of stabilization in economic data that is contributing to a more constructive near-term view on China.<br /> First, China’s primary measure of manufacturing PMI activity was 49.8 for September. While still hovering below an expansionary level of 50, the reading showed signs of stabilizing and came in ahead of the consensus of 49.7, which we view as positive. Moreover, we were expecting muted manufacturing data in September, due to the massive manufacturing shutdown mandated by the government to ensure blue skies for China’s commemoration of the 70th anniversary of the end of WWII. Our view has been that once the “Victory Blue” shutdown concluded, we would begin to see signs of recent stimulus working through to economic data. State-owned enterprises are likely to show the benefits of stimulus first, with a trickle down to small and medium enterprises in the coming months.<br /> As we’ve noted in the past, China has many tools at its disposal to support its economy. In recent weeks, we’ve seen several fiscal policy moves that demonstrate the country’s commitment to avoid a hard landing while promoting the transition to a more consumption-driven economy. These include an auto tax cut and a reduction in requirements for property down payments. We’ve also seen a stabilization of the renminbi after a sharp depreciation, with additional capital controls being implemented to manage the flow of capital and reduce the volatility of this exchange rate. Over the medium-term, we should expect further depreciation of the renminbi relative to the dollar, as this currency adjusts to the weakness of other major trading currencies like the euro and yen, but the rate of this depreciation will be important as companies and governments adjust to this new environment.<br /> To be clear, we still believe capital preservation remains paramount in the current environment. Nonetheless, we believe we are seeing encouraging signs that can improve investor perception about China by alleviating concerns about an imminent hard landing, while the correction we’ve seen in the equity markets seems to have more than discounted this risk. As a result, we are using this opportunity to gradually increase our exposure to China, both through equities that we believe have more than priced in this near-term risk and defensive convertibles that appear well positioned to participate in the eventual recovery of the Chinese equity markets.<br /> Over the next weeks, there will be a great deal more data for us to evaluate, including foreign reserves data on October 6. Signs of stabilization in foreign reserves and savings deposits would point to a reduced risk of capital flight, which would give us more confidence in a gradual depreciation of the renminbi. We’ll also be watching for </p>