Episode Transcript
[00:00:06] Welcome to the John Lothian News daily update podcast for August 15, 2024. I am your host, John Lothian. This podcast is brought to you by John Lothian News, the home of markets wiki and markets wiki education. Thank you for joining us. Here are the hits and takes chemists from today's JLN Today is the birthday of the modern financial markets era. It was 53 years ago today, on August 15, 1971, that President Richard Nixon announced the suspension of the us dollar's convertibility into gold, effectively ending the gold standard. This event is commonly referred to as the Nixon shock. It marked the transition to a fiat currency system where the value of currency is not directly tied to a physical commodity like gold. You can watch Nixon's announcement demonizing international money speculators in a YouTube video where he announces the end of the Bretton Woods International monetary system. The SEC is seeking public comments on the information collection process for form one K, which is used by tier two issuers under regulation a to file annual reports. These reports include audited financial statements and details about the issuers operations, management and resources. The SEC estimates that 353 issuers file form one K annually, with each submission taking about 600 hours to prepare, totaling 158,850 hours of annual burden. Additionally, the SEC is seeking public comments on information collection process for form one U, which is used by tier two issuers under regulation a to report significant events or changes in their business within four business days. The SEC estimates that approximately 1502 issuers file form one U annually, with each report taking about 5 hours to prepare, resulting in a total annual burden of 6384 hours. The public is invited to comment on the necessity, accuracy, and ways to improve or reduce the burden of this information collection within 60 days of the notice by October 15, 2024. Regulation a an SEC exemption from the full registration requirements of the securities act of 1933 allows companies to raise capital through two tiers, tier one and two tier issuers. Tier one issuers can raise up to $20 million within a twelve month period and are subject to basic disclosure requirements, but they do not have ongoing reporting obligations after the offering unless they become subject to the reporting requirements of the securities Exchange act of 1934. In contrast, tier two issuers can raise up to $75 million within the same period and must comply with more stringent disclosure and reporting requirements, including providing audited financial statements and filing annual semiannual and current event reports with the SEC.
[00:03:40] Additionally, tier two issuers are exempt from state level securities regulations, which facilitates offering securities across multiple states. This makes regulation a a streamlined alternative to a traditional ipo for companies seeking to raise capital with tier two issuers benefiting from the ability to raise larger amounts while adhering to stricter oversight.
[00:04:07] Eurex has published a report titled charting a new Future for Real Estate. FTSE EPRA nere futures prepared by Bruce Gunn of Susquehanna International Group, Jason Radzik of Bridge Four capital, David Marino of EpRA, Dominic Moorenhout of EpRa, John Wurruth of Nerite, Ali Zati of FTSE Russell and Matthew Riley of Urx. The report discusses the evolution and future of the listed real estate market, focusing on Eurex's launch of FTSE near it futures. These features represent a significant advancement in listed real estate investment, offering enhanced access and risk management for investors. The growing maturity of the listed real estate market is evident with its expansion into new sectors like student housing and data centers. Listed real estate has become increasingly attractive to various investors, including pension funds and individual investors due to its potential for yield generation and portfolio diversification. The total value of commercial real estate covered by the FTSE EPRA Narret index is approximately $36.7 trillion, with the listed sector valued at 3.2 trillion USD. The listed market offers great transparency and liquidity compared to private real estate, making it easier for investors to enter and exit positions. The FTSE EPRA near it indices provide a reliable benchmark for performance, allowing for better risk management. Real estate investment trusts, or reits, play a crucial role in the listed market, making up more than half of its total market capitalization. The introduction of REIT regimes in various countries has spurred growth in this sector. The report identifies the transition to sustainability as a significant challenge and opportunity for the real estate market. Market investors are increasingly seeking high performing, sustainable real estate investments, driving the need for sophisticated investment products and strategies. The positive reception of the FTSE EPRA nere futures suggests further product development in the derivatives market, enhancing liquidity and trading opportunities for investors, the authors wrote.
[00:06:47] Here are experts from in front of Fow's paywall from some of today's stories us firms will face restricted access to Eurex's MSCI information technology index futures due to regulatory index makeup rules from September, intercontinental exchange or ICE plans to enhance its clearinghouse to support the vast us treasury market. Mirroring its previous success with credit default swaps or cds clearing, TPICap focuses on consolidating its strength in natural gas power and oil within the Americas energy brokering market. Meanwhile, a CFTC commissioner dissented against the agencys fines on Cowan and company bank and Truest bank for record keeping failures the FIAS operations division is hosting Washington Update 2024 on October 9, from 03:30 p.m. to 06:30 p.m. central time at the Union League Club in Chicago, 65 West Jackson Blvd. Join FIA CEO Walt Lucan, FIA, VP of us government relations Kyle Glenn and Washington insider Jimmy Ryan, managing partner and co founder of AVAC, for a discussion on the upcoming presidential election and its impact on the regulatory landscape, crypto legislation, and the derivatives markets. There will be a networking reception immediately afterward with light hors d'oeuvres and drinks provided. There are fees associated with attending and the event is closed to the press. For more information and to register, go to a link in Todays newsletter our most read stories from our previous edition of JLN options were why a historic surge in Vix wasnt the signal investors thought it was from Market watch Mayx Safire joins OCC from the trade and when others are fearful, try this option strategy from Barrons subscribe to the JLN Options newsletter with a link in today's JLN.
[00:09:11] Here are more stories from the first read section of today's JLN.
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[00:10:10] Here's a story from the Wall Street Journal. The headline the bacon apocalypse that wasn't after a California animal welfare law took effect, feared pork shortages haven't materialized, but the Golden State is paying higher prices.
[00:10:26] Last July, as California businesses braced for the impact of a long delayed animal welfare law, some market watchers worried that the new rules would lead to bacon shortages and sky high prices. Worse, it was feared California voters decision would ripple outward and increase pork prices across the rest of the country. So far, the shortage fears have proven overblown. But one thing is clear, Californians are paying more for certain cuts like bacon and pork loin at the grocery store, according to a checkout scanner data analyzed by the US Department of Agriculture. My comment I cooked five pounds of bacon for my family this weekend. I didn't hear a squeal about any apocalypse. Here's another story, this one from Reuters. The headline UBS to liquidate $2 billion real estate fund as office downturn bites UBS is to liquidate a $2 billion real estate fund it acquired when it bought Credit Suisse, the swiss bank said on Thursday, in a sign of real estate investors selling out of troubled commercial property markets. The fund, which holds four fifths of its assets and offices, had faced investor redemption requests, but the swiss bank said meeting those would require selling assets at an inopportune time, impacting existing investors. UBS concluded it was better to wind down the entire fund. My comment maybe there are better ways to invest in commercial real estate. Hint, hint.
[00:12:10] Here's another story, this one from Bloomberg. The headline gamblers are dumping stocks to bet on sports new study says gaming group says sports wagering is for fun, not investment Robinhood guides meme crowd to more sensible way of investing as sports gambling takes off in the US, quickly turning into a multibillion dollar business, a worrisome trend is starting to emerge. Americans appear to be yanking money out of their stock brokerage accounts to fund their online betting. This is the key finding laid out in a recent working paper titled Gambling Away Sports betting impact on vulnerable households. It claims to find evidence that for every dollar spent on the recreational activity now legalized in most states since 2018, net investments in stocks and other financial instruments dropped by just over $2.
[00:13:13] Now here is your apocalypse the stock betters apocalypse.
[00:13:19] Here are the top three stories from Wednesdays JLnjdev the Financial Times hit a triple with all of our top three stories on Wednesday. First was japanese Prime Minister Fumio Kishida to step down. Second was australian regulator Sue's stock exchange over botched blockchain upgrade. And third was how hedge funds are fighting back against the SEC's aggressive agenda. Here are the top three stories from the lead section of todays JLN. The first is also from the Financial Times. The dozens of financial groups to pay nearly $400 million in SEC texting probe companies that self reported violations are facing smaller fines than those which did not disclose the conduct. 26 Wall street companies have agreed to pay $393 million to the securities and Exchange Commission to settle the latest round of charges over employee texting and messaging on platforms such as WhatsApp about business matters, Ameriprise, Edward Jones, LPL Financial, Raymond James are among the financial groups settling with the SEC, with each of those four paying $50 million in penalties, the regulator announced on Wednesday. The fines range as high as $50 million a company and as low as 400,000, the regulator said, noting that the groups which self reported violations will pay significantly lower penalties than otherwise they would have. Here's another story. This is from Bloomberg the headline energy trader vital fined by us for bets on live cattle futures. The US Commodity Futures Trading Commission fined vital group a half a million dollars for breaching position limits on exchanges trading cattle futures and crude oil. The breaches, which involved the trading house holding a larger amount of contracts for the commodities than are allowed by us regulators, took place in 2022, the CFTC announced on Wednesday. In cattle vital held 771 December 2022 CME live cattle futures contracts the equivalent of more than 30 million pounds of steers or heifers, and 171 more than the federal spot month speculative limit of 600 contracts, according to the CFTC.
[00:16:04] Here's another story, this one from Afrdehenheze ASIC goes hard on the ASX the notion of corporate regulator taking on the shareholder operator in federal court is a pretty momentous step, yet there's no hesitation in Joe Longo's hard tackle.
[00:16:27] Ouch. Joe Longo says that when the ASX falls short of expectation on its place to list and invest with confidence, it has wide ranging consequences across the market. Some very specific consequences are now apparent in the decision by the Australian securities and Investment Commission to go after ASX in court.
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[00:17:44] This podcast has been produced by Andrew Lothian.
