GOAL IS SMOOTH
FED NOT DONE YET
The Pentagon tasked Lockheed Martin Corp with equipping a fighter with a missile killing laser by 2021, a challenge that has eluded the military for over two decades. Lockheed in November secured a $26 million deal from the Pentagon to develop a loser for a supersonic F-15 jet capable of disabling a missile or drone from a mile or more out according to the Defense Department. It is the landmark piece of a Pentagon push to develop a low cost way to outmatch adversaries such as China that fielding evermore capable missiles and drones. Lasers fired from trucks or a Navy ship already been tested but military officials said fitted one to a jet would be a crucial breakthrough in providing defenses that can be employed in large numbers.
HARVARD FACES PROBE
The Chicago Board of Options Exchange (CBOE) launches its futures exchange for Bitcoin at 5:00 p.m. CT, Sunday, December 10. Contracts will trade under the ticker symbol XBT and the CBOE is waiving all transaction fees for XBT futures for the entire month of December.
Contracts (in increments of 1 bitcoin) will be settled in cash (U.S. dollars) every day based on Gemini auction prices. According to the CBOE, “the exchange may list for trading up to four near-term expiration weeks (‘weekly’ contracts), three near-term serial months (‘serial’ contracts), and three months on the March quarterly cycle (‘quarterly’ contracts).”
Why does all this matter? The main effect is to give market makers and hedge funds a way to play their favorite game: betting on both sides of the market. Without a regulated exchange, no institution would be willing to accept the credit, illiquidity, and hacker risks of the physical side of the trade.
Settling trades physically, in the case of a digital currency like bitcoin, would mean verifying the actual delivery of bitcoin into an inventory system or directly to a counterparty. The security and monitoring required to do that would be nearly impossible to bear. Hence, cash settlement in dollars.
As we noted, CBOE’s XBT exchange — and CME’s exchange launching December 18 — gives investors to make both long and short bets on bitcoin futures. Large investors will seek arbitrage opportunities where they don’t lose (a lot) whatever happens.
How successful the XBT will be among institutional traders may depend on margin requirements. Because bitcoin price swings are both large and arbitrary, a margin requirement of 30% or more may be required by a clearing house that doesn’t want to go broke. For comparison, a futures contract on crude oil (1,000 barrels) typically carries a margin requirement of around 4%.
It seems reasonable to expect that big traders will wait to jump in with both feet until the cost of financing arbitrage trades comes down — probably way down. That means that small, less sophisticated investors are going to be making a lot of directional trades, most of which will be long. That’s called speculation and, like all things, cannot go on forever
HITS CHICAGO BOARD OF OPTIONS
INFLATION GROWING IN EUROPE
Wells Fargo & Co. (NYSE: WFC) is not off the hook yet, as a federal regulator says that it is considering a formal enforcement action in regards to the bank’s dealings in auto-insurance and mortgage operations.
In a letter sent earlier this month by the Office of the Comptroller of the Currency (OCC), the agency said that Wells Fargo had willingly harmed customers in these two business segments. It further went on to say that Wells Fargo had repeatedly failed to correct other issues stemming from an even broader range of its business segments.While Wells Fargo has yet to comment on this letter in particular, the bank has been undergoing some systematic changes since John Stumpf stepped down as CEO.
This past summer, Wells Fargo admitted that for years it had forced nearly 600,000 customers who financed their car purchases with Wells Fargo to pay for collision coverage they didn’t need. The bank also said about 20,000 customers had their cars wrongly repossessed. Those customers failed to pay the improper insurance charges.In order to make amends, the bank said that it would provide cash reimbursements of roughly $100 million to customers and make $30 million in account adjustments, in relation to these wrongful insurance dealings.
This isn’t the first time that Wells Fargo has been under the microscope. Previously this megabank was under fire from Washington for its sales tactics and opening fake accounts.24/7 Wall St. Bullish on Tax Reform, Top Analyst Raises Price Targets on Banks
Now according to the Wall Street Journal:
The enforcement action being weighed against Wells Fargo is a cease-and-desist order, the people familiar with the matter said. Also known as a consent order, it is among an array of formal enforcement proceedings the OCC can take when it determines that deficiencies in a bank’s operations are severe, uncorrected, unsafe or unsound. The issuance of a consent order typically includes steps the bank’s board or management must take to correct the deficiencies and a time period for doing so.The OCC’s letter underscores the continuing challenges faced by Wells Fargo as it seeks to emerge from a widespread scandal that came to a head last year. It involved disclosures that Wells Fargo had created as many as 3.5 million accounts using fictitious or unauthorized customer information. Any new sanction by regulators could further dent the bank’s reputation and could provide ammunition for private lawsuits against the company.Shares of Wells Fargo were last seen up about 1.8% on the day at $56.55, with a consensus analyst price target of $57.66 and a 52-week range of $49.27 to $59.99
Not that long ago, the European Central Bank decided to trim the monthly bond purchases and commit to keeping interest rates low. After all, negative interest rates have been a hallmark of Europe. But what will the central bank do if inflation starts to get too high?
Eurostat, the statistical office of the European Union, has released its flash reading for inflation in November. The gain of 1.5% was up from 1.4% in October.
U.S. inflation, on the other hand, has been challenging (and in some cases exceeding) the 2.0% to 2.5% target range of the U.S. Federal Reserve.
According to Eurostat, energy is expected to have the highest annual rate in November with a 4.7% gain. That compares to a 3.0% gain in October. The area of food, alcohol and tobacco rose by 2.2% in November, down from a 2.3% gain in October. The price for services held steady at 1.2% in November, and the prices of non-energy industrial goods held steady at a 0.4% gain.
Europe’s unemployment rate has now also hit its lowest level since the start of 2009. That being said, the euro area unemployment rate was shown to be 8.8% in October, versus 8.9% in September. The EU28 unemployment rate was 7.4% in October 2017, down from 7.5% the prior month.
As a reminder, the euro area consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland
Certified Public Accountants FAX 732-516-9778
328 Amboy Ave, Metuchen NJ 08840
DHL TO TEST SEMI
RULES ON FEES
LOCKHEED WORKS ON
NOVEMBER NEWS LETTER 6
DHL said it preordered 10 of Tesla Inc's Semi trucks, joining a growing list of large transportation companies looking to test the all electric vehicle. DHL Supply Chain, which handles logistics operations for retailers and manufacturers , intends to use the heavy duty Tesla trucks for shuttle runs and same day customer runs in major US cities, the company said Tuesday. DHL alsoplnas to test the electric trucks on longer runs and to evaluate its impact on driver safety and comfort.
Tesla Chief Executive Elon Musk unveiled the Semi this month,promising the first models would hit the road in 2019, and run up to 500 miles on a single charge. WalMart and JB Huntr Transport Services Inc said shortlyu after the announcement they had reserved vehicles and other logistics companies have followed suit. In most cases the orders have been small with buyers planning to test out the Semi on short runs.
Airlines make much of their money from services beyond selling tickets. They sell food on planes, upgrade economy seats and charge fees for what they deem to be “extra baggage.” Consumers had the ability to decide whether they wanted to use those extra services. That has become more difficult. Carriers will no longer have to tell passengers about some baggage fees.
According to the New York Post:
Airlines won’t be forced to disclose the price of baggage fees up front to travelers shopping for tickets under a federal move that sends an Obama-era proposal packing.
The Trump administration is scraping the proposed rule that requires airlines companies and ticket agencies to be up-front about the price of “optional” services, such as the price of checking bags, according to the federal Department of Transportation.
Planning the price of a trip just got harder.
A study from IdeaWorks reveals how important these fees have become to carriers:
The importance and prevalence of ancillary revenue continues to move forward with an ever larger footprint on airline financial statements and the products offered to consumers. Back in 2007 the top ten airlines, as rated by total ancillary revenue, generated $2.1 billion. Fast forward to financial results of 2016 and the top ten tally has leapt to more than $28 billion.
Presumably, the lack of disclosure will make the increase in these fees a bit easier. Passengers may have to make baggage fee charge decisions late in their trip planning process.
Airlines will still have to show these fees on their own websites, but not on sites that sell tickets for them or when people call reservations systems to book their tickets.
Happy holidays, travelers. Your trips may have gotten more expensive.
The Justice Department opened an investigation into the use of race in Harvard University's admissions practices and has accused the university of failing to cooperate with the probe. The Justice Department is investigating complains that formed the basis of a federa civil lawsuit filed in 2014 in Boston. The suit alleges Harvard intentionally discriminates against Asian Americans by limiting the number of Asian students who are admitted. The lawsuit brought by a nonprofit called Students for a Fair Admissions said the practices federal civil rights law and asks a federal judge to prohibit Harvard form using race as a factor in future undergraduate admissions decisions. The Justice Department, whose Civil Rights Division is conducting the investigation into similar allegations said in a letter to Harvard's lawyers dated Nov 17 stated the school was being investigated under Title VI of the Civil Rights Act of 1964, which bars discrimination on the basis of race, color, and national origin for organizations that receive federal funding. The letter also said the school had failed to comply with a Nov 2 deadline to provide documents related realted to the university's admissions polices and practices.