Volatility: How ‘Algos’ Changed the Rhythm of the Market – Financial Times (subscription)

Philippe Jabre was the quintessential swashbuckling trader, slicing his way through markets first at GLG Partners and then an eponymous hedge fund he founded in 2007 — at the time one of the industry’s biggest-ever launches. But in December he fell on his sword, closing Jabre Capital after racking up huge losses. The fault, he said, was machines.

Trump Wants Trade Deal With China to Boost Stocks – Bloomberg

President Donald Trump is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations.

World Bank Sees Global Growth Slowing in 2019 – Reuters

The growth of the global economy is expected to slow to 2.9 percent in 2019 compared with 3 percent in 2018, the World Bank said, citing elevated trade tensions and international trade moderation.

Pledges Made by Italy’s Populist Government Come Up Against Economic Reality – Wall Street Journal (subscription)

Populist parties came to power promising not to use public money to save troubled lenders, now they are offering to do so.

Germany Shows Symptoms of Deeper Economic Pain – Wall Street Journal (subscription)

Fresh signs of a weakening German economy are raising fears that last year’s slowdown could spill into 2019, deepening the challenges facing policy makers in Europe and the US.

Yen May Hit 100 Against U.S. Dollar, Ex-BOJ Official – Bloomberg

There is a good chance the yen will strengthen to 100 against the dollar in coming months as slowing global growth and U.S.-China trade tensions keep investors on edge, a former senior Bank of Japan official said.

Market confidence is growing about a potential RBA rate cut – Business Insider

Since April last year policymakers at the Reserve Bank of Australia (RBA) have stated that the next move in Australia’s cash rate was likely to be up. Initially, financial markets agreed with the bank, but now they disagree.

Regulatory News

UK Financial Watchdog Steps Up Plans for No-Deal Brexit – Financial Times  (subscription)

UK markets regulators have announced further measures to ensure millions of financial contracts will be unaffected by Brexit, as authorities step up preparations to avoid financial turmoil should Britain leave the EU without any agreement.

New York Fed Publishes Policy on Confidential Market Information – Profit & Loss

The Federal Reserve Bank of New York has taken the step of publishing a statement detailing how it handles confidential information from foreign exchange and Treasury market participants.

US Government Shutdown Deprives Markets of Key Data – Financial Times (subscription)

Investors, policymakers and even farmers are being deprived of key economic data as the partial US government shutdown moves into its third week.

BI, Ministry Team Up to Launch Integrated Forex Data Monitoring – Jakarta Post

Bank Indonesia (BI) and the Finance Ministry signed an agreement on Monday on the integrated data monitoring on foreign exchange, particularly relating to exports and imports.

Crypto News

Central Banks Remain Cautious on Digital Currencies: BIS – Profit & Loss

A survey of central banks by the Bank for International Settlements finds that while a majority are collaboratively looking at the implications of issuing a central bank digital currency, indeed many have reached the stage of considering practical issues, they are proceeding cautiously with few reporting plans to actually issue a digital currency in the short or medium term. 

Sweden’s National Bank Warns of e-Currency Scam – The Local Sweden

Sweden’s Riksbank has repeatedly raised the idea of ‘e-krona’ or digital currency in recent years, but on Monday reiterated that a project launched in 2017 to look into the possibility of launching such a currency had not yet been completed.

Cryptocurrency Hackers Steal $1.5M of Ethereum Classic in Rare Attack – The Independent

Ethereum classic, a spin-off of the world’s second most popular cryptocurrency, has been hit by a series of major attacks on its blockchain network. 

India Could Legalize Cryptocurrency as Government Panel Mulls Strict Regulations – CCN

HODLers in India have a reason to smile in the New Year as holding cryptocurrencies in the country could soon be legalized.

Company News

Hedge Funds Suffer Worst Year Since 2011 – Financial Times  (subscription)

Hedge funds had their worst year in seven years as financial market turmoil in the fourth quarter of 2018 caught many off-guard. But it was not all bad news for the beleaguered industry: they also beat the S&P 500 index for the first time in a decade.

American Express Suspends a Director in Foreign-Exchange Pricing Probe – Wall Street Journal (subscription)

American Express Co. suspended a director in its foreign-exchange department as part of its ongoing investigation into pricing practices in the division, according to people familiar with the matter.

Apple Cuts iPhone Production Plan by 10% – Nikkei Asian Review (subscription)

Apple is cutting its current production plan for new iPhones by about 10% for the next three months in a sign that the U.S. smartphone maker is expecting a further hit this year, just a week after its market-shaking revelation that it would miss revenue forecasts at the end of 2018.

AQR Announces Job Cuts After Disappointing 2018 – Financial Times (subscription)

AQR, the quantitative investment group founded by billionaire Clifford Asness, says it is making “small reductions” to its headcount after a tough 2018, when most of its biggest public funds suffered big losses.

Market Savvy

Don’t Blame the Fed if the US Economy Tanks – Financial Times (subscription)

An old adage has it that US economic recoveries never die of old age but are killed off by the Federal Reserve. This belief was clearly a factor in the markets’ worries at the turn of the year. Yet as Bradford DeLong of the University of California at Berkeley points out in a recent piece on Project Syndicate, this is plain wrong. Three of the last four US recessions were, in fact, sparked by financial market shocks.

How Many More Times Will the US Fed Raise Rates in 2019? Just Once, says Vanguard – South China Morning Post

The US Federal Reserve would end the current cycle of interest rate increases in 2019 by raising borrowing costs only once, putting a floor under global financial markets, while China’s economic growth may stabilise in the second half, according to Vanguard Group.

Forecasts for Aussie, Kiwi Cut, but Gains Still Seen by End-2019 – Reuters

Forex analysts have lowered their forecasts for the Australian and New Zealand dollars from a month earlier but still see them bouncing modestly by the end of 2019, a Reuters poll showed, with uncertainties rife amid the Sino-U.S. trade battle.

More Volatility Predicted for Rand in 2019 – Independent

The rand is expected to remain volatile in 2019 as the political temperature hots up ahead of the election and the continued strain in relations between the US and China. On Friday, the rand was quoted at 13.9649 to the US dollar.