NOTABLE MOVES  

• U.S. Advance GDP q/q at 3.5% vs expected 3.3%. Advance GDP Price Index q/q at 1.7% vs expected 2.1%. Revised UoM Consumer Sentiment at 98.6 vs expected 98.9. U.S. Treasuries prices rose, as the market turmoil drove some safe-haven positioning. The 2-yr yield decreased five basis points to 2.81%, and the 10-yr yield dropped six basis points to 3.08%. USDJPY down -0.45%, $111.91.
• Euro up 0.24%, $1.1403. Over the weekend, UK’s Chancellor Philip Hammond warned that a no-deal Brexit will jeopardise budget plans, prolonging UK’S austerity and that the government will need a new emergency one. Sterling up 0.12%, $1.2833. USDCAD up 0.28%, $1.3107.
• S&P 500 down -1.73%, 2,658.69. Nasdaq down -2.34%, 6,852.40. Nikkei down -0.40%, 21,184.60.
• A stronger-than-expected advance Q3 GDP reading (+3.5% actual vs +3.3% consensus) took a backseat in Friday’s trading action to Amazon lowering its fourth quarter revenue guidance and Alphabet missing third quarter revenue expectations. Facebook (FB 145.37, -5.58, -3.7%), Netflix (NFLX 299.83, -13.04, -4.2%), and Apple (AAPL 216.30, -3.50, -1.6%) also back-pedalled from notable gains in the previous session, adding pressure to the communication services and information technology (-1.9%) sectors. In other earnings news, Mohawk Industries (MHK 115.03, -36.04, -23.9%), Western Digital (WDC 44.19, -9.82, -18.2%), and Colgate-Palmolive (CL 59.58, -4.24, -6.6%) contributed to angst over future earnings growth. Flooring manufacturing company Mohawk cited weakening demand, inflation, and pricing pressures for its lower outlook; Western Digital said customers are being more conservative, resulting in softening demand; and Colgate-Palmolive encountered profit margin pressures from higher raw material and packaging material costs.
• Conversely, Dow component Intel (INTC 45.69, +1.38) easily beat consensus revenue and EPS estimates for the third quarter and issued fourth quarter guidance that exceeded analysts’ average estimates. Shares of the chip maker finished 3.1% higher.

  BLOCKCHAIN & CRYPTOCURRENCY NEWS  

• Ukraine: Economic Development and Trade Ministry Launches State Policy to Legalize Crypto
  The Economic Development and Trade Ministry of Ukraine has initiated a “state policy” for the classification and legalization of crypto-related activities. The Ministry has issued an official press release stating that its purpose is to “create understandable conditions for conducting activities in the field of virtual assets and virtual currencies,” and to usher in “adoption of the concept of a state policy” for crypto. It has proposed establishing legal definitions for key terms, including “virtual currency” (“cryptocurrency,”) “virtual assets,” Initial Coin (or Token) Offerings (ICOs or ITOs), cryptocurrency mining, “smart contracts,” and “tokens.” The concept is expected to be implemented in two stages, and will be completed in 2021.
• World’s Largest Crypto Exchange OKEx to Delist 50+ Trading Pairs Due to ‘Weak’ Performance
  Major Hong Kong-based cryptocurrency exchange OKEx will delist over 50 trading pairs with weak performance. The exchange will halt the trading of a swathe of pairs that they cite as having weak liquidity and trading volume at 6:00 am Oct. 31, 2018 CET. The exchange warned users that they should cancel their orders of the affected pairs from the platform. Earlier this month, OKEx announced the listings of four stablecoins at once – TrueUSD (TUSD), USD Coin (USDC), Gemini Dollar (GUSD), and Paxos Standard Token (PAX). Founded in 2014, OKEx is at press time the world’s largest cryptocurrency exchange in terms of adjusted trading volume, seeing around $402.5 million in trades over the past 24 hours.
• VeChain Signs MoU for Blockchain Development with Cyprus
  Singapore-based blockchain platform VeChain Foundation, U.S. blockchain startup CREAM, and the national investment partner of the Republic of Cyprus, Invest Cyprus, have signed a Memorandum of Understanding (MoU). The MoU is focused on establishing a framework in the field of blockchain technologies and related use cases. Per the MoU, the parties will work on a number of national level investment strategies, which involve blockchain-powered economies and promote blockchain technology, particularly in financial services. The suggested reforms will purportedly comply with regulatory procedures such as Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements, E.U. law, and other regulations.

NOTABLE MOVES  

• U.S. Core Durable Goods Orders m/m at 0.1% vs expected 0.5%. Durable Goods Orders m/m at 0.8% vs expected -1.3%. The Fed-sensitive 2-yr yield was unchanged at 2.86%, while the benchmark 10-yr yield closed one basis point higher at 3.14%. USDJPY up 0.10%, $112.37.
• German Ifo Business Climate at 102.8 vs expected 103.1. The ECB left its key interest rates unchanged at 0.00%, as expected. ECB confirmed that its plan to end monetary easing by the end of the year remains on track. “Regarding non-standard monetary policy measures, the Governing Council will continue to make net purchases under the asset purchase programme (APP) at the new monthly pace of 15 billion euros until the end of December 2018,” the ECB said in a statement. The decision takes place as concerns mount over Italy’s fiscal policies and their potential impact over the stability of the euro area. The central bank’s president said in a subsequent press conference that he expected euro zone inflation to pick up despite weaker momentum. Euro down -0.16%, $1.1374.
• Brexit negotiations remain in a stalemate, and the latest header on the issue referred to UK’s Brexit Secretary Dominic Raab, who said that the EU’s “intransigence” is preventing them from achieving a deal. Sterling down -0.48%, $1.2819. USDCAD up 0.13%, $1.3072.
• S&P 500 up 1.86%, 2,705.57. Nasdaq up 3.35%, 7,016.39. Nikkei down -3.72%, 21,268.73.
• Heavyweight Microsoft (MSFT 108.30, +5.98) powered the recently struggling information technology sector, closing 5.8% higher after reporting above-consensus top and bottom lines Tesla (TSLA 314.86, +26.36, +9.1%) and Twitter (TWTR 31.80, +4.26, +15.5%) comfortably exceeded earnings expectations. Tesla, in fact, surprised investors by turning a profit last quarter.
• The FANG bunch traded bid, led by Amazon (AMZN 1782.17, +117.97) and Alphabet (GOOG 1095.57, +44.86) sporting gains of 7.1% and 4.3%, respectively, ahead of their earnings reports. Ford (F 8.99, +0.81, +9.9%), Visa (V 140.52, +6.26, +4.7%), Comcast (CMCSA 35.84, +1.72, +5.0%), American Airlines (AAL 32.37, +2.03, +6.7%), and Whirlpool (WHR 111.34, +7.07, +6.8%) all finished with healthy gains, capitalizing on better-than-expected earnings results. Advanced Micro Devices (AMD 19.27, -3.52, -15.5%) issued a revenue warning for the fourth quarter, and Southwest Air (LUV 49.91, -4.67, -8.6%) acknowledged that it is facing some higher-than-expected cost pressures.
• Amazon dropped roughly -7% in after-hours trading on revenue and guidance miss. The e-commerce and cloud giant reported EPS of $5.75 versus consensus estimates of $3.08, according to FactSet. But revenues of $56.58 fell short of expectations for $57.1 billion. In addition, Amazon guided for revenue of $66.5 billion to $72.5 billion, below a $73.79 billion consensus estimate.
• Likewise, Alphabet stock sinks on revenue miss, down more than -3.4% after hours. Alphabet reported EPS of $13.06 versus $10.42 expected and revenues of $33.7 billion versus $34.04 billion expected.

BLOCKCHAIN & CRYPTOCURRENCY NEWS  

China’s Alibaba Cloud Expands Enterprise Blockchain Offering to Global Markets
Alibaba Cloud, the cloud computing arm of China’s e-commerce giant Alibaba Group, is enhancing its Blockchain-as-a-Service (BaaS) offering outside China. Alibaba Cloud will expand its enterprise-level blockchain service to major international markets including Europe, the U.S., and South East Asia. The blockchain solution offers a broad range of applications such as automatic deployment, consortium blockchain management, smart contracts, and others. Founded in 2009, Alibaba Cloud is reportedly considered as the largest cloud services supplier in China, as well as the third largest in the world, and now is operating 52 availability zones in 19 regions across the world.

German Central Bank and Deutsche Boerse Successfully Complete Blockchain Settlement Trial
The central bank of Germany, Deutsche Bundesbank, and securities marketplace organizer Deutsche Boerse (DB) have successfully completed the trial of a blockchain solution in the settlements area. The transaction volume and speed of a production system were tested on the Hyperledger Fabric framework and Digital Asset, a distributed ledger (DLT) solution for the financial sector. The high latency for some technology stacks and high CPU-usage were mentioned among weaknesses, while higher resiliency and lower cost of reconciliation due to the joint database were considered to be benefits. The main point of the joint research was bond issuance, settlement, corporate actions, and redemption, as well as cash transfer including the provisioning of digital coins, transfer between market participants, and settlement of cash payments, the summary states.

Japan’s Financial Regulator Mulls Cap on Cryptocurrency Margin Trading
Japan’s Financial Services Agency (FSA) is planning to put a cap on the leverage available for crypto margin trading to curb speculation and risk. Currently, there are no regulations specifically governing the cryptocurrency margin trading space in Japan, with exchanges offering as much as 25 times leverage. That means traders can effectively borrow cryptocurrencies worth up to 25 times the deposit with an exchange, however, just a 4 percent drop in the purchased crypto assets would wipe out the initial deposit.  The news follows previous statistics released by the FSA, which indicated cryptocurrency margin trading has seen rapid growth in Japan. For instance, over 80 percent of the total cryptocurrency trading volume in Japan in 2017 came from derivatives trading, which recorded $543 billion. More than 90 percent of that figure came from margin traders. Seven of the 16 licensed exchanges by the FSA now offer marge trading services, adding that a panel comprised of FSA officials and industry experts is now set to discuss ways to impose potential regulations in this area.

NOTABLE MOVES

• U.S. Flash Manufacturing PMI at 55.9 vs expected 55.4. Flash Services PMI at 54.7 vs expected 54.1. Fed indicated in its Fed Beige Book for September that manufacturing prices continued to rise, attributed to tariffs. The Fed-sensitive 2-yr yield closed two basis points lower at 2.86%, and the benchmark 10-yr yield closed four basis points lower at 3.12%. USDJPY down -0.39%, $112.00.
• German Flash Manufacturing PMI at 52.3 vs expected 53.4. German Flash Services PMI at 53.6 vs expected 55.5. E.U. Flash Manufacturing PMI at 52.1 vs expected 53.0. Flash Services PMI at 53.3 vs expected 54.5. Euro dropped -0.63%, $1.1399. In Brexit, PM May had cabinet meetings on Wednesday and the fear is not only for no-deal, but a revolt within her party and cabinet. Sterling fell -0.76%, $1.2884.
• BoC raises interest rate to 1.75%. The BoC also pointed out that since the economy is now running close to its potential, it no longer needs policy stimulus and hence the overnight rate will need to rise to neutral in order to achieve the inflation target. Senior Deputy Governor Wilkins reiterated that the Bank estimates neutral to be in a 2.5 to 3.5% range. Risks to the global economic outlook related to the U.S.– China trade tensions were also discussed. But Governor Poloz pointed out that related risks to the economy are not all to the downside because there could also be a negotiated de-escalation of those tensions. The BoC’s statement was more hawkish than the one it published last September. The central bank not only raised interest rates (expected), but it also dropped its reference to “gradual” rate hikes. USDCAD traded to a low of 1.2971 in the aftermath and recovered to close -0.28% lower, $1.3048.
• Stocks initially opened flat, but soon began ticking lower before doing a nose dive in the late afternoon. AT&T (T 30.36, -2.66, -8.1%) and Texas Instruments (TXN 92.01, -8.24, -8.2%) weighed on their respective communication services and information technology sectors with disappointing earnings reports on Wednesday. Telecom giant AT&T missed earnings expectations, citing its recent acquisitions and accounting changes. Likewise, chipmaker Texas Instruments reported below-consensus revenue and issued a Q4 earnings warning, acknowledging that demand has slowed for its products across most markets.  STMicroelectronics (STM 13.69, -2.18) also fell, losing -13.7%, after lowering its guidance, and the Philadelphia Semiconductor Index dropped -6.6%. Dow component Boeing (BA 354.65, +4.60, +1.3%) reported better-than-expected top and bottom lines and raised its earnings guidance.
• Tesla’s shares jumped by more than 12% (After Market Close), with the company reporting a surprise profit for the third quarter. Tesla gave investors hope that its production rates will improve, saying that the number of labor hours to build the Model 3 fell. Musk told analysts on a call it was an “incredibly historic quarter” for the young car company. It was welcome news for investors following an otherwise a tumultuous few months. The electric carmaker reported adjusted EPS of $2.90, well above consensus estimates for a loss of 7 cents per share. Revenue came in at $6.82 billion, soundly ahead of a $6.1 billion consensus.
• Microsoft rises on earnings beat, but Azure growth slows. Shares in the tech giant rose 4.3% in after market hours after the company reported better-than-expected earnings for its fiscal first quarter. They reported earnings of $1.14 per share, topping analysts’ expectations of 96 cents per share. The company also reported revenue of $29.08 billion versus Wall Street’s expectation of revenue of $27.90 billion.

CRYPTOCURRENCY UPDATES

Nasdaq Wins Blockchain Patent for Smart Contract-Based Information Release System

Yesterday, Nasdaq, the worlds second largest stock exchange by the market cup, revealed a new blockchain patent award. Blockchain technology, or more specifically smart contracts, could be used to automate and ensure the security of the information release process. Each modification and/or approval of the document is recorded as a separate transaction on the blockchain where each of the submitter, editor, approver, and recipients interact with the blockchain with corresponding unique digital identifiers — such as private keys. Several months ago, Nasdaq has tested a blockchain proof-of-concept system for securities collateral, and has also filed for other patents linked to the technology. Last month, Nasdaq executives said they were looking at adding cryptocurrency data to its market analytics tool after users showed what it called “abundant” interest.

Crypto Exchange Bitfinex Denies Allegedly ‘Fake’ Tether Volumes Listed on CoinMarketCap

Major crypto exchange Bitfinex was recently accused of publishing trading volume data from “a market that doesn’t exist.” The article had argued that since the exchange does not provide a USDT/USD trading pair, this was an intentional strategy to make it appear as though a large volume of such trades were occuring on the exchange. In fact, Bifinex users are only able to deposit and withdraw both Tether and U.S. dollars through their accounts, rather than execute such trades. Bitfinex has recently been prompted to deny rumors that it was “insolvent” or facing banking issues in response to reports that its banking partner, Puerto Rico’s Noble Bank International, was seeking a buyer and had lost both Bitfinex and affiliated firm Tether as clients. The following week, the platform temporarily suspended all fiat wire deposits without providing a specific reason, although it had acknowledged in its prior statement that “complications continue to exist” for Bitfinex “in the domain of fiat transactions.”

Chinese E-commerce Giant Alibaba Wins Preliminary Injunction Against Alibabacoin

Chinese e-commerce giant Alibaba has won a preliminary injunction against Dubai-based Alibabacoin Foundation in a lawsuit over the misleading use of Alibaba in their name. The court’s decision implies that the Alibabacoin Foundation will no longer be able to promote or sell its cryptocurrency in the country until larger action on this case is decided. In mid-October, the Alibabacoin Foundation reportedly offered for Alibaba to purchase their startup. According to the Alibabacoin Foundation’s website, the company wants to build a fund security system improved by a secret technique for implementing a blockchain algorithm into a facial recognition hashing process. According to CoinMarketcCap, Alibabacoin is ranked 1691th in global cryptocurrency rankings, and has seen a decline in price this week dropping from $1.6 per coin to $0.37 as of press time.

NOTABLE MOVES

• U.S. Richmond Manufacturing Index at 15 vs expected 25. Japan’s finance minister said he expects a planned sales tax increase next October to cause some disruptions. The 10-yr yield finished three basis points lower at 3.17%, but was down as much as eight basis points. USDJPY down -0.34%, $112.45.
• German PPI m/m at 0.5% vs expected 0.3%. EU rejected Italy’s budget plan to increase its deficit spending to 2.4% of GDP in 2019. Euro up 0.05%, $1.1471. In Brexit, headlines indicated that the EU is willing to offer PM May a UK-wide customs union as a way around the Irish backstop issue, but it will have to be negotiated separately to the Withdrawal agreement. PM May, however, wants a UK-wide customs backstop that is legally-binding and included in the divorce bill. Sterling up 0.14%, $1.2980. USDCAD down -0.14%, $1.3083.
• S&P 500 down -0.55%, 2,740.69. Nasdaq down -0.32%, 7,118.67. Nikkei down -2.67%, 22,010.78.
• Disappointing earnings reports from Dow components 3M (MMM 192.55, -8.81) and Caterpillar (CAT 118.98, -9.73) heightened worries that earnings growth may have peaked and weighed on the industrial sector, which lost -1.6%. 3M reported lower-than-expected top and bottom lines and also lowered its earnings guidance. Meanwhile, Caterpillar drew attention to higher material and freight costs, including tariffs. Shares of 3M lost -4.4%, and Caterpillar shares fell -7.6%. Dow component McDonald’s (MCD 177.15, +10.52, +6.3%) helped lift the consumer discretionary sector after it reported above-consensus top and bottom lines. Meanwhile, Verizon (VZ 57.21, +2.23, +4.1%) led the communication services sector higher after it reported better-than-expected earnings.

CRYPTOCURRENCY UPDATES

Payments Company Square Open-Sources Its Bitcoin Cold Storage Tool

According to U.S. payments processing company Square’s announcement it is open-sourcing its Bitcoin (BTC) cold storage solution dubbed “Subzero“. “Subzero,” uses a Hardware Security Module (HSM)-backed cold wallet for which the company has now released the code, documentation, and tools. A HSMs’ security benefits include robust protection against physical tampering, strong access control and the option to replicate keys for backup or recovery purposes. Subzero has reportedly added multi-signature protection for its wallet, in which “participants [must] use a combination of smart cards and passwords” to authenticate transfers. QR codes are used to exchange the minimal amount of data needed between the offline and online world. The company also says it has leveraged industry stalwart crypto wallet Trezor’s “open source projects (such as trezor-crypto) as much as possible.”

Use of Blockchain in Major Industries by Numbers: Retail, Manufacturing, Finance, and Others

Many startups, major conglomerates, supply chain operators, and distributors have attempted to integrate blockchain technology over the past two years, to increase transparency and reduce the power of central entities in data processing. The exponential increase in demand and interest in blockchain technology has enabled multi-billion dollar markets for the blockchain in major sectors including manufacturing, agriculture, retail, supply chain, IoT, and payments. The researchers from ReportLinker firm stated that the blockchain in manufacturing market is forecasted to be worth around $30 million by 2020, and the market will continue to grow at an annual growth rate of 80 percent, to $566 million by 2025. The offshore banking market, which is mostly dominated by financial institutions and banks that oversee savings accounts for high profile retail traders and institutional investors, is estimated to be valued at around $32 trillion. Blockchain in energy and insurance are also predicted by MarketsandMarkets to grow to $7 billion and $1,4 billion respectively by the end of 2023, at a compound annual growth rate of 84.9 percent.

Ex-Fidelity Exec Joins Blockchain Company Bloq as Chief Operating Officer

A former executive at financial services giant Fidelity Investments Hadley Stern has been appointed Chief Operating Officer (COO) at blockchain infrastructure firm Bloq. In a Medium post published today, entitled “The Tokenization of Things and Building the Unimaginable,” Stern gave his perspective on the history of the new technologies driving an “efficient, frictionless” economy stating that without coming off as doctrinaire or fundamentalist, it’s fair to say that Satoshi Nakamoto delivered a true gift in the Bitcoin whitepaper, that is, a way to produce and account for a provably scarce, wholly digital asset. Stern’s blog post further outlined three fundamental market areas to be undertaken at Bloq as part of the company’s aim to further the management and integration of digital assets.