Episode Transcript
[00:00:12] Welcome to the John Lothian News Daily Update podcast for April 4, 2025. I am your host, John Lothian. If you are not subscribed to the John Lothian Newsletter, you can do so on johnlothiannews.com follow us on MarketsWiki, LinkedIn, Facebook, Instagram, and Bluesky. Let's dive in. Here are the hits and takes Comments from today's JLN the futures industry has long spoken out against the implementation of transaction taxes, articulating a range of concerns that align closely with the principles of efficiency and market functionality. Proponents of this stance argue that imposing such taxes would invariably lead to increased costs for end users. The reasoning is straightforward. As transaction taxes rise, brokers and traders typically pass these costs on to consumers, resulting in higher prices for goods and services.
[00:01:16] Moreover, a transaction tax introduces friction into the trading process, complicating the execution of trades and potentially slowing down market activity. This friction can manifest in various ways, from increased time taken to complete transactions to widening of the bid ask spreads. A wider spread means that the difference between buying and selling prices increases, making it more expensive for participants to enter or exit positions. Consequently, this inefficiency can deter trading altogether, stifling liquidity and ultimately harming the overall market. In contrast to the futures industry's battle against transactions taxes, looking at a macroeconomic viewpoint like the Trump administration's approach has been characterized by the broad imposition of tariffs on a range of goods. Much like transaction taxes, tariffs elevate costs for the end users. Businesses facing higher import costs are often compelled to pass these expenses along the supply chain, leading to increased prices prices for consumers. This dynamic creates a similar friction in the marketplace as companies navigate the complexities of higher costs and potential retaliatory measures from trading partners. Furthermore, tariffs disrupt the global trade system, introducing inefficiencies akin to those feared by the futures industry. With transaction taxes, the imposition of tariffs can lead to trade wars, resulting in reduced trade volumes, strained relationships between nations, and a more fragmented global economy. Just as transaction taxes can deter trading activity and widen spreads in the futures markets, tariffs can hinder the free flow of goods and services across borders, ultimately making international trade less efficient. In both cases, whether it be transaction taxes in the futures market or tariffs in global trade, the underlying principle principle remains the same. Increased costs and friction lead to less efficient markets. The futures industry's fight against transaction taxes echoes the broader concerns raised by economists and market participants regarding tariffs. Both scenarios illustrate the delicate balance between regulation and market efficiency, highlighting the risks associated with imposing additional costs on transactions that can stifle economic growth and innovation.
[00:04:13] The tariffs are hitting the European suds business the Financial Times has a story titled brewers warn Trump Beer tariffs could cost 100,000 jobs in Europe with the sub headline industry blindsided by 25% levy and confused whether it applies only to products imported in cans. The article says European brewers are warning that Trump's new 25% tariff on beer imports to the US could lead to 100,000 job losses and brewery closures across Europe. The tariff, part of Trump's Liberation Day measures implemented this week, has caught the industry by surprise and created confusion about whether it applies to all beer or only canned products. The brewers of Europe trade group, representing major companies like AB Internet, Bev, Heineken and Molson Kors, has urged the European Commission to take diplomatic action, stating we are calling on the Commission to use all diplomatic channels and whether through negotiation or retaliation, find a way to de escalate this tariff in which we have become a collateral victim.
[00:05:39] European brewers exported 870 million Euro worth of beer to the US in 2024 and the industry questions why beer has been classified as an aluminum derivative product alongside items like cables and wires. While Mexican beer imports constitute about 85 of Constellation brand sales, Corona and Modelo, Heineken's exposure is lower at 3% of group sales. The British Chambers of Commerce suggests that tariffs were implemented after lobbying by US industry to limit foreign competition. On a more serious note, the FT has an opinion piece by Ian Harnett titled How Weaponized Trade could Lead to Weaponized Capital with the sub headline as international structures that promoted free trade are unwound, there is a rising risk of a return capital controls. In an analysis of Trump's recent Liberation Day tariffs, Harnett warns that weaponized trade could lead to weaponized capital with far reaching consequences beyond stock portfolios. He identified three key capital being reallocated away from the US towards non US markets, a trend already visible in investor surveys and ETF flows reduced CR border capital flows as trade imbalances fall, potentially impacting US non bank financial institutions that account for 70% of US private sector financial assets and the repatriation of funds as International investors reconsider US investments with foreign ownership of US government debt already falling from 33% in 2015 to 24% in 20152024 Harnett notes that America's vulnerability to capital repatriation may explain why the administration is rapidly developing a sovereign wealth fund through privatization and land sales. He concludes that a world of reduced global capital availability would create significant problems for the EU and uk, potentially necessitating greater official capital for fund investments in defense, infrastructure and energy, with the ultimate risk of being returned to the capital controls of the 1960s and 70s as international structures promoting free trade since the 1980s are unwound.
[00:08:39] Employees from Intercontinental Exchange or ICE, recently participated in a weekend of community service in Atlanta's historic West side. Chris Edmonds shared on LinkedIn, led by Edmonds, the president of fixed income and data services. At ice, volunteers engaged in various projects in partnership with the Westside Future Fund. The initiative included gardening at Truly Living well and beautification efforts at M. Agnes Jones elementary School. Edmonds emphasized the importance of teamwork in ICE's corporate culture, noting that the volunteer event brought together colleagues and their families to make a lasting impact on the local community. The company's philanthropic efforts aimed to support students and residents in the Westside area.
[00:09:39] Barry Ritzholz was back on IEX's boxes and lines. The Masters in Business host and Ritz Holz wealth Management founder discussed his new book how not to Invest. With Ronan Ryan and John Ramsey, they dove into bad financial advice, the pitfalls of market forecasting and why even experts stumble. Check out the episode with a link in today's newsletter. Here are the headlines from in front of fow's Paywall from some recent stories Markets complacent about tariff risk Goldman Sachs BIS targets regulators with AI project launch volumes up 15% in March with growth across asset classes European regulator calls for transparency Feedback under Miffir review LCH clears first Malaysian interest rate swap boosting Asian coverage and analysis Regulators weigh OTC reporting reforms to tackle global risk Rafael Zenata has started a new chapter as head of exchange traded derivatives liquidity management at Urex, he shared on LinkedIn. Rafael was promoted from crypto equity and index sales to his new position at urex. This is his second tour of duty with the exchange. He previously worked at Urex from 2012 to 2017.
[00:11:22] Congratulations to Laurie McHaughtry, head of capital markets at Euromoney, for winning State Street's Journalist of the Year, Investor Services and Journalist of the Year regulation in this year's Press Awards. For the second year in a row, she shared her joy on a post on LinkedIn. Jelen interviewed McCaughtry when she joined the trade previously, and you can see that video with a link in today's news letter. Our most read stories from our previous edition of JLN Options were I'm never going to buy options again. Retail traders online are despairing over the impact of Trump's tariffs. From Business Insider CME starts smaller, longer futures contracts targeting retail investors from Bloomberg and finally CBO Data Vantage, enhancing market access and connectivity in 2025. From CBOE. Subscribe to the free JLN Options newsletter with the link in today's jln. Here are more stories from the First Read section of today's jln. We have a sponsored content message from our friends at Vermiculous. Learn more about Veritrade Vermiculus Trading System Veritrade is the result of decades of experience from a team that has has built and delivered cutting edge systems for the world's largest exchanges. The system is the most advanced on the market today, built to adapt to the rapid changes in the trading industry and designed for those who want to stay ahead of the competition at a lower cost. Veritrade is designed to handle all asset classes with high availability, meeting the demands of the modern trading world world Engineered for ultra low latency, deterministic order matching and seamless scalability, it's built to keep you ahead of the curve. Whether implemented on premises or in the cloud, Veritrade offers unmatched flexibility with real time risk management and seamless integration with existing systems. Built on a microservices architecture with a dual zone design, trade enables continuous innovation while ensuring the high reliability that modern trading demands. With 24. 7 support for effortless upgrades, the system is designed to evolve with the future of markets across all asset classes and is delivered on time and on budget. You can learn more by clicking on a link in today's newsletter.
[00:14:14] Here's a story with an interview I did with Andrew Bush.
[00:14:20] AI transforms financial sector, but human touch still crucial, says Andrew Bush. In an era where artificial intelligence is revolutionizing industries, the financial sector stands at a crossroads of opportunity and caution. With companies like JP Morgan spending a staggering 16 billion doll dollars annually on technology, people worry that it's going to replace jobs and I would say there are so many job openings right now still and you're going to lose a lot of baby boomers shortly, notes financial expert Andrew Bush in a recent interview with John Lothian News. Don't wait around for bad things happening. Take your people that are there now and enhance their capabilities as productivity.
[00:15:17] You can watch the whole interview on johnlothiannews.com Here's a couple of other interviews from our Boca coverage.
[00:15:30] FTSE Russell Expands options offering eyes, Digital Assets and Commodities FTSE Russell is broadening its index offerings beyond equities with a focus on options, digital assets and commodities, company executives revealed in an interview at FIA Boca 50, Tom Jenkins, head of Index Partnerships and Listed Derivatives, highlighted the growing popularity of options based exchange traded funds and the company's efforts to educate investors about these products.
[00:16:08] You can watch this video on johnlothiannews.com There are also interviews from our Boca FIA coverage of Justin Llewellyn Jones and Alan Green from Trading Technologies and Travis Schwab of aventus on johnlothiannews.com Here's a story from the Wall Street Journal the A market rattling attempt to make the American economy Trump always wanted the president dreams of factories reopened and towns revitalized by terror tariffs. But stocks plunged on fears economic growth will suffer as investors and consumers fretted in recent weeks about the fallout if President Trump unleashed a massive trade war. Trump himself kept looking to the past. The rest of the world has been ripping off the US for 40 years, he told advisers who asked him to articulate his economic vision. It was, he and his advisors would note, an argument he has been making on television since the 1980s. Before his second term ends, he said he feels he has to right those wrongs. If people complained about the tariffs he was about to impose, Trump told his inner circle to remind the public of his view of how the US Was once and could be again, a place with thriving main streets and hometowns where American workers made American products sold to the American public.
[00:17:47] My comment, looking back while driving at 90 miles an hour will always get you smashed.
[00:17:54] Here's another story from the Wall Street Journal. The headline Trump says this is a Great Time to get rich.
[00:18:02] President Trump says investors were pouring large amounts of money into the US Saying in a social media post early Friday that this was a quarter great time to get rich.
[00:18:15] To many investors coming into the United States and investing massive amounts of money. My policies will never change, he said on his Truth social platform. This is a great time to get rich. Richer than ever before.
[00:18:34] There were three exclamations after that.
[00:18:38] My this is something that he says in this truth social post that dooms the U.S. economy and the markets. My policies will never change.
[00:18:50] No US President abstained from listening to the market as a derivative of what the people were telling him about his policies. Trump is famous for not reading now he is not listening.
[00:19:05] Here's another story, this one from Barron's. The headline IRS to return thousands of fired workers to their jobs just before tax day. Remember all those workers at the Internal Revenue Service who got fired back in February?
[00:19:21] Now the agency says it is bringing them back to active duty just in time for tax day. That means more people will be available to answer calls and tackle the the more than 140 million individual tax returns the agency is expecting this season.
[00:19:42] My comment Just who I want to talk to, an angry IRS agent.
[00:19:48] Here are the top three stories from Thursday's JLN. Our top click story on Thursday was CNN's this is the dubious way Trump calculated his reciprocal tariffs. Second was tariff that destroyed the American economy in just weeks, a video on YouTube. And third was OCC cleared volumes up 30% to new monthly record in March.
[00:20:20] Here are the top three stories from the lead section of today's jln. The first story is from the Wall Street Journal. The headline Market upheaval from Trump's tariffs could be just the beginning. Investors who think the return of high tariffs will hammer the economy into recession should expect much bigger falls in stocks and bond yields.
[00:20:46] This is by James McIntosh. Is recession now spelled tariff?
[00:20:53] And that was tariff in all capital letters.
[00:20:57] Markets were gripped by the recession trade after President Trump's tariffs on Wednesday threatened a global trade war. Treasury yields, stock futures and the dollar all plunged. This isn't mere market hyperbole. Thursday was only the sixth time in history that the S&P 500 had fallen more than 4%, while the dollar also fell more than 1%. With investors shocked that the greenback had failed in its usual role as a safe haven, the carnage in the markets might be just the beginning. If the biggest US tax rise since at least the 1950s causes the economy to shrink, stocks and treasury yields have still a long way to go down.
[00:21:52] Here's another story, this one from Bloomberg. The headline SEC Nominee Atkins advance by Senate Banking Committee. The Senate Banking Committee advanced the nomination of Paul Atkins to lead the securities and Exchange Commission on Thursday. If confirmed to the roll by the U.S. senate, Atkins is expected to rein in SEC enforcement while playing a major role in shaping new regulations for the digital asset industry. The timing of that vote hasn't been scheduled yet.
[00:22:30] Here's one more story. This is from the Financial Times. The headline Shares of Wall street firms rocked by new US Tariff regime Financier thought Trump would usher in pro business era, but financial stocks have stumbled as tariff plans become clear.
[00:22:51] Donald Trump's tariff regime pummeled Wall Street's most powerful investment groups, many of which had expected just months ago that the president's policies would fuel a golden age of economic growth and deal making. Shares in some of the world's biggest private capital groups, including Apollo Global management management and KKR dropped more than 12% on Thursday, while Blackstone dropped nearly 10%. Credit focused companies including Ares Management and Blue Owl also suffered as investors marked down growth expectations and some dealmakers said the default rates on low rated loans could continue to rise.
[00:23:40] If you enjoyed this episode, please leave us a review on your preferred listing platform. This podcast is brought to you by John Lothian News, the home of MarketsWiki and MarketsWiki Education.
[00:23:57] Thank you for joining us. Have a great day and stay safe and treat people the same way you want to be treated, treated with respect, equality and justice. This has been John Lothian Goodbye. This podcast has been produced by John Lothian.
