• U.S. Advance Q4 GDP estimate showed economic output increased at an annualized rate of 2.6% (consensus 2.2%). With the fourth quarter numbers, it is estimated that real GDP increased 2.9% in 2018 versus 2.2% in 2017. The key takeaway from the report is that it supported the notion that the U.S. economy held up relatively well in the fourth quarter despite the stock market volatility. In turn, it will help rebut any notions that the economy is on the cusp of a recession.
• Initial claims for the week ending February 23 increased by 8,000 to 225,000 (consensus 221,000). Continuing claims for the week ending February 16 increased by 79,000 to 1.805 million.The key takeaway from this report is that the low level of initial claims, which have held below 300,000 for 208 consecutive weeks, continues to support the view that the labor market remains tight and that employers are reluctant to let go of employees.
• Chicago PMI, increased to 64.7 in February (consensus 57.5) from 56.7 in January.  The New Orders Index rebounded swiftly from a two-year low to its highest level since November.
• Media attention was placed on Trump abruptly ending a two-day summit with North Korean leader Kim Jong-un. Trump hoped to curb Pyongyang’s nuclear-weapons program, but communication broke down when North Korea wanted the U.S. to lift all sanctions in exchange for closing some, but not all, of its nuclear sites. North Korea later refuted this account. 
• U.S. Treasuries finished lower following the release of the better-than-expected advance Q4 GDP reading. The 2-yr yield increased one basis point to 2.50%, and the 10-yr yield increased two basis points to 2.71%. The U.S. Dollar Index increased 0.1% to 96.22. WTI crude rose 0.5% to $57.22/bbl.

• S&P 500 lost -0.28% on Thursday in another tight-ranged session, which included the underperformance of cyclical sectors and the outperformance of defensive-oriented sectors. Investors also weighed better-than-expected GDP data, the latest batch of earnings reports, and some geopolitical drama.
• The S&P 500 materials (-1.3%), energy (-1.0%), and consumer discretionary (-0.6%) sectors underperformed the broader market. Conversely, the utilities (+0.4%), consumer staples (+0.3%), and real estate (+0.3%) sectors outperformed
• Booking Holdings (BKNG 1697.04, -208.90, -11.0%), HP Inc. (HPQ 19.73, -4.12, -17.3%), Box (BOX 20.24, -4.64, -18.7%), and Crocs (CROX 25.68, -2.84, -10.0%) dropped considerably following their reports. Anheuser-Busch InBev (BUD 78.16, +3.44, +4.6%) and Monster Beverage (MNST 63.83, +5.09, +8.7%), however, pleased investors with their results.

• Particular attention during the U.S. session was placed on congressional testimony from Fed Chair Jerome Powell, U.S. Trade Representative Robert Lighthizer, and Trump’s former personal lawyer, Michael Cohen.
• Powell in his semi-annual monetary policy acknowledged the Fed is close to agreeing on a plan to end the balance sheet runoff. USTR Lighthizer said that it is too early to predict the outcome of the U.S.-China trade negotiations. The views expressed by Cohen before the House Committee on Oversight and Reform ultimately had little, if any, impact on the market.
• Trump began a two-day meeting with North Korean leader Kim Jong Un in Vietnam, hoping to take steps toward denuclearizing North Korea. Separately, Pakistan shot down two Indian fighter jets over their contested border, escalating tensions between the two countries.
• U.S. Treasuries were under pressure, driving yields higher in a curve-steepening trade. The 2-yr yield increased three basis points to 2.51%, and the 10-yr yield increased six basis points to 2.69%. The U.S. Dollar Index increased 0.2% to 96.15. WTI crude rose 2.4% to $56.94/bbl following some bullish inventory data.

• The S&P 500 lost -0.05% on Wednesday as investors weighed a handful of headlines on the political, monetary, and geopolitical fronts, as well as the latest batch of earnings reports.The benchmark index was down as much as -0.7% in early trading action but climbed back to its flat line in the afternoon, where it faced some continued resistance near the 2800 level.
• The outperformance from retail stocks supported an intraday rebound. Better-than-expected results from Lowe’s (LOW 107.62, +2.59, +2.5%), TJX (TJX 51.56, +1.84, +3.7%), and Best Buy (BBY 68.82, +8.51, +14.1%) sparked a retail rally, evidenced by the SPDR S&P Retail ETF (XRT 46.08, +0.46) gaining 1.0%. On the other hand, disappointing earnings and/or guidance from several companies, including Weight Watchers (WTW 19.37, -10.20, -35.5%) and Mylan N.V. (MYL 26.01, -4.61, -15.1%), helped keep a lid on the broader market.

• Housing starts declined 11.2% month-over-month in December to a seasonally adjusted annual rate of 1.078 million (consensus 1.254 million). Building permits were up 0.3% month-over-month to a seasonally adjusted annual rate of 1.326 million (1.290 million).
• The Conference Board’s Consumer Confidence Index jumped to 131.4 in February (consensus 125.0) from an upwardly revised 121.7 (from 120.2) in January. The February reading broke a string of three consecutive monthly declines in the index.
• The key takeaway from the report is that consumers’ attitude about the outlook improved greatly, coinciding with the sharp improvement in the stock market, continued strength in the labor market, and the end of the partial government shutdown. That upbeat outlook should be a supportive factor for consumer spending.
• Powell delivered his semi-annual testimony on the economy to the Senate Banking Committee. The market’s response was relatively muted, as he maintained the Fed’s “patient” approach to monetary policy and balance sheet normalization and did not introduce any “new” views that could have been construed as hawkish. 
• U.S. Treasuries saw increased buying interest, which drove yields lower across the curve. The 2-yr yield decreased three basis points to 2.48%, and the 10-yr yield decreased four basis points to 2.64%. WTI crude decreased 0.3% to $55.60/bbl.
• Sterling caught strong bids on renewed market confidence that a hard-Brexit exit from the EU was not going to happen. Two events yesterday helped fuel the rally. One was the formal call by Labor party leader Jeremy Corbyn for a 2nd Brexit referendum and the other were reports that PM May would consider extending the deadline if her Brexit negotiated deal could not pass Parliament.

• The S&P 500 decreased -0.08% as it struggled for direction on Tuesday. The stock market wavered between small gains and losses while investors weighed mixed economic data, key corporate news, and comments from Powell.
• The S&P 500 materials (-0.6%), health care (-0.3%), and industrial (-0.3%) sectors underperformed the broader market. Conversely, the information technology (+0.2%), consumer discretionary (+0.2%), and communication services (+0.1%) sectors outperformed.
• Home Depot’s (HD 188.30, -1.68, -0.9%) weaker-than-expected FY20 earnings guidance, and December housing starts increasing at the slowest pace (1.078 million) since September 2016, helped stir early concerns about a slower pace of economic, and earnings, growth unfolding in the months ahead, particularly for companies with close ties to the housing market. Caterpillar (CAT 137.98, -3.43, -2.4%) was another drag on the market following a “double” downgrade to ‘Sell from ‘Buy’ at UBS. UBS also lowered its price target to $125 from $154, citing a belief that 55% of the company’s end markets will peak in 2019, pressuring revenue and margins in 2020.

• In U.S.-China Trade Deal, speculation has now shifted from an extension to a conclusion of the trade war. Memorandums of understanding are being drafted in 6 key areas that include cyber theft, intellectual property, currency and non-tariff barriers.
• Assuming that both sides continue to make progress, Trump says they will be planning for a Summit at Mar-a-Lago to conclude an agreement.
• U.S. Treasuries closed on a lower note, pushing yields higher across the curve. The 2-yr yield increased three basis points to 2.51%, and the 10-yr yield increased two basis points to 2.67%. The U.S. Dollar Index declined -0.1% to 96.42. WTI crude lost -3.1% to $55.45/bbl.
• Sterling extended its gains after Prime Minister May delayed the “meaningful vote” to March 12, two weeks before they are scheduled to leave the European Union. Investors believe that by running down the clock, May leaves Parliament with no choice but to take over the Brexit process. She’ll have to request for an extension of Article 50 or risk being shut out of negotiations. 
• Canadian dollar was the only major currency that failed to benefit from the bid in risk appetite. Crude tumbled more than -3% after a tweet from Trump that simply said “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”

• S&P 500 advanced as much as 0.8% on Monday after Trump said he will delay the March 1 trade deadline as negotiations with China have progressed favorably. The benchmark index, however, steadily retreated throughout the session, ultimately finishing higher by 0.12%.
• Trump followed up with a tweet during late trading action that U.S.-China talks are in advanced stages, but he did not provide a new deadline or any further details. Still, growing expectations for a trade deal underpinned the leadership from the S&P 500 cyclical sectors. Shares of semiconductor companies, many of which have revenue exposure to China, also outperformed and helped lift the heavily-weighted tech sector. The Philadelphia Semiconductor Index increased 0.8%.
• General Electric (GE 10.82, +0.65, +6.4%) gave the industrial sector a boost after it agreed to sell its biopharma business to Danaher (DHR 123.15, +9.67, +8.5%) for $21.4 billion, which includes $21 billion in cash. General Electric had surged 15.5% in the opening minutes of trading but, like the broader market, finished near its session low.

BLOCKCHAIN & CRYPTOCURRENCY NEWS

Coinbase Pro Adds Support for XRP
Coinbase Pro, the professional offering of United States-based crypto trading platform and wallet service Coinbase, is adding support for Ripple’s XRP token. Per the announcement Coinbase Pro will now accept deposits of XRP for a minimum of 12 hours before enabling full trading. Coinbase notes that it will first establish sufficient liquidity on the platform, opening trading pairs in U.S. dollars, euro and Bitcoin (BTC) in phases. Full trading of XRP will be available to customers in the U.S., Canada, the European Union, the United Kingdom, Singapore and Australia. Coinbase may expand its services to other countries at a later time. XRP trading will go through four stages, which include “transfer-only,” “post-only,” “limit-only,” and “full trading. The first two stages will enable users to transfer XRP to Coinbase Pro accounts and post limit orders, the subsequent two will allow customers to match limit orders and fully trade with XRP. The addition of XRP to Coinbase has been long-awaited by the crypto community.

Bitfinex’s Stolen Funds Partially Recovered and Returned by US Law Enforcement
The United States’ law enforcement recovered and returned over $104,000 stolen from the cryptocurrency exchange Bitfinex. The funds returned are reportedly just under 27.7 Bitcoins (BTC), which were stolen in August 2016 in a hack that involved the theft of around 120,000 BTC in total. Bitfinex reportedly generalized the losses across all accounts and credited BFX tokens, one per every dollar lost, to those affected by the hack. These tokens could be redeemed for one dollar each or exchanged for the company’s stocks. The holders who chose to convert into stocks also received Recovery Right Token (RRT) tokens, while all BFX tokens were then destroyed. Since some of the stolen coins have been received, Bitfinex notes that they are now reportedly being converted to U.S. dollars and paid to RTT holders.

Accenture Works With Mastercard, Amazon to Boost Circular Supply Chain Using DLT
Global professional services firm Accenture is working with major global firms including Mastercard to introduce a blockchain-based circular supply chain. An active user of blockchain and digital ledger technology, Accenture now intends to employ the tech as a key component to boost the circular supply chain. The term circular supply chain encompasses all stages on the supply chain, from the beginning to the end, in order to eliminate waste and improve sustainability for the environment. Within the announced initiative, Accenture is collaborating with major global companies including cloud computing firm Amazon Web Services, blockchain supply chain firm Everledger, international development organization Mercy Corps and multinational financial services corporation Mastercard. According to the release, the new blockchain-enabled circular supply chain capability will allow customers to identify small-scale suppliers and growers on the supply chain and make rewards by using direct payments. Additionally, the new capability is designed to provide better management of inventory and waste elimination, transparency across the supply chain and authenticity of products.

 NOTABLE MOVES  

As of Sat, Feb 23, Singapore Time zone UTC+8

USDJPY, +0.00%, $110.69
EURUSD, +0.07%, $1.1343
GBPUSD, +0.02%, $1.3054
USDCAD, -0.78%, $1.3129
AUDUSD, +0.49%, $0.7129
NZDUSD, +0.65%, $0.6845

S&P500, +0.64%, 2,792.67
Nasdaq, +0.79%, 7,090.63
Nikkei Futures, -0.19%, 21,400.0

CURRENCY MARKET WRAP  

• There were no prints out of the U.S. on Friday. Risk-Assets were positive as Trade talks yield progress. Investors received several updates from U.S-China trade talks in Washington: (1) The two sides made an agreement on currency, but no specifics were provided; (2) China reportedly committed to purchase $1.2 trillion in U.S. goods; and (3) Trump said he will work out the final points on trade with China’s President Xi most likely in March. Although he also downplayed expectations by saying that they “perhaps could work out the final deal and perhaps not,” they are closer to an agreement than before. Trump even talked about a short term memorandum of understanding (MOU).
• Remarks from Fed officials on Friday provided little surprises and were not market-moving. The Fed speakers maintained a dovish-minded stance on the central bank’s monetary policy and balance sheet normalization efforts.
• U.S. Treasuries closed on a higher note, pushing yields lower across the curve. The 2-yr yield decreased five basis points to 2.48%, and the 10-yr yield decreased three basis points to 2.66%. The U.S. Dollar Index declined -0.1% to 96.55. WTI crude rose 0.5% to $57.25/bbl.

STOCK MARKET WRAP 

• The S&P 500 gained 0.64% on Friday in a broad-based rally while U.S.-China trade talks showed signs of progress. Nine of the 11 S&P 500 sectors finished higher with information technology (+1.3%), communication services (+1.1%), and health care (+0.9%) leading the advance. Conversely, the financials (-0.2%) and consumer staples (-0.3%) sectors finished in the red.
• Kraft Heinz (KHC 34.95, -13.23) made headlines, plunging -27.5%, after the company missed earnings expectations, slashed its dividend, and announced that it has received a subpoena from the SEC, inquiring about the company’s accounting practices.

BLOCKCHAIN & CRYPTOCURRENCY NEWS

Crypto Hedge Fund Pantera Capital Seals $130 Million for Third Crypto Venture Fund

Crypto hedge fund Pantera Capital has already sealed $130 million out of a $175 million target for its third crypto venture fund. For Pantera’s debut fund in 2013, the firm had raised $13 million, rising to $25 million for its second. Reportedly, Pantera raised the game for its third offering, saying at the time that the $175 million target was “a function of how fast the space is moving, the talent coming in, the opportunities, and the sizing of rounds.” Pantera executives have previously disclosed that $100 million from 140 investors had already raised by mid-August 2018, according to a CNBC report at the time. The fund reportedly has a decade-long investment period, and offers investors equity in a blockchain company in return for their capital. Pantera has also been developing nontraditional venture funds for crypto investors, such as an investment strategy with input from machine learning and a hedge fund that focuses on initial coin offerings (ICO).

Korea Exchange Official: US Decision on Bitcoin ETF Will Set Tone for Local Crypto Market

An official at South Korea’s sole securities exchange operator, the Korea Exchange (KRX), says the bourse is closely eyeing developments from United States regulators in regard to Bitcoin (BTC) exchange-traded funds (ETFs). The official, reportedly speaking on condition of anonymity, was cited by local English-language daily The Korea Herald on Feb. 20. ETFs are securities that track a basket of assets proportionately represented in the fund’s shares. They are seen by some as a potential development that would herald the widespread adoption of crypto as a regulated and passive investment instrument. The U.S. Securities and Exchange Commission (SEC) has to date either rejected or postponed its decision on a wide range of proposed crypto-related ETFs. the KRX official reported that KRX is extensively discussing the provision of a solid Bitcoin index, which would be “required for the launch of such ETFs when commercialized and integrated into the market because it would eventually concern investor protection issues.”

Texas Cryptocurrency Businesses Agree to Halt Token Offerings After Cease and Desist

Texas’ state securities regulator announced it had reached an agreement with four cryptocurrency companies it accused of selling unregistered securities. The result of a nine-month process, Mintage Mining, BC Holdings and Investments, Social Membership Network Holding, Nui Social and manager Darren Olayan agreed to refrain from offering cryptocurrency tokens to investors. As respondents listed in the order, the entities will also pay an administrative fine of $25,000. The latest order confirms the findings, and requires no further activity to take place until suitable licensing and documentation are collected. The order was signed by all the named respondents. The move constitutes the most recent victory for the SSB in its ongoing clampdown on unregistered securities sales by the emerging cryptocurrency sector.

• The U.S. and China began working on six memorandums of understanding on structural issues that would outline the path to a trade deal, according to Reuters. Specific details on talks have been sparse, though, with China’s Ministry of Commerce spokesperson saying that there was nothing new to report. The market’s nonchalant disposition despite the reported progress possibly suggested the market’s patience for hopeful-sounding headlines may be wearing thin, especially when taking into account the number of rallies that took place amid upbeat headlines, but little concrete progress.
• U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield and the 10-yr yield increased three basis points each to 2.53% and 2.69%, respectively. The U.S. Dollar Index increased 0.2% to 96.62. WTI crude declined -0.3% to $57.00/bbl.
• The movers in the FX market yesterday was the sharp reversal (from .7169 – .7207) and big declines (high of .7207 to low of .7071) in the Aussie. At first, Aussie was positively surprised by the labor market data that showed solid hiring at the start of the year. More than 39K (consensus 15.2k) jobs were created in January with full time work rising by the strongest amount in nearly 2 years. The unemployment rate held at a 7 year low of 5% (consensus 5%). However shortly thereafter, Westpac said the Reserve Bank could cut interest rates twice this year. They felt that a lower growth profile and higher unemployment rate will require a response by the RBA in August and November. What really killed the rally in Aussie was China’s decision to ban imports of Australian coal into their northern port of Dalian. Not only is this a big hit (2% of all Australian coal imports are destined for Dalian) for the industry but China is also getting tough on Australia after they banned Huawei from their 5G network last year. 

• The S&P 500 lost -0.35% on Thursday, as disappointing economic data helped simmer the market’s lengthy rally.
• The S&P 500 energy (-1.6%), health care (-0.9%), and communication services (-0.6%) sectors underperformed the broader market. Conversely, the utilities (+0.8%) and consumer staples (+0.3%) sectors showed relative strength.The stock market began the day slightly lower as weaker-than-expected economic data tempered buying interest. U.S. business investment declined for the second consecutive month in December, and the eurozone manufacturing sector experienced its first contraction since 2013.
• Nike (NKE 83.95, -0.89, -1.1%) was under pressure following some on-the-court drama. College basketball sensation Zion Williamson sustained an injury when his Nike sneakers broke apart during a highly-anticipated game. Nike issued a statement that they were working to identify the issue.
• Tesla (TSLA 291.23, -11.33) for its part lost 3.7% after Consumer Reports dropped its Model 3 recommendation due to the car’s reliability issues. On a related note, Tesla has been under scrutiny for its untimely handling of returns and refunds.

BLOCKCHAIN & CRYPTOCURRENCY UPDATES

Japanese Banking Giant Mizuho to Launch Its Yen-Pegged Stablecoin in March

Japan’s banking giant Mizuho Financial Group will launch its bespoke stablecoin for payments and remittance services on March 1. In a partnership with around 60 counterpart financial institutions — which together reportedly host 56 million user accounts — Mizuho’s new “J-Coin” digital currency platform will reportedly directly link existing bank accounts with digital wallets. The currency will reportedly be managed by a dedicated mobile app, dubbed J-Coin Pay, using QR codes at checkout to complete retail payments. According to Nikkei, the currency will be a digital stablecoin fixed at a price of 1 yen (~$0.01) per unit, and transfers between bank accounts and J-Coin wallets are set to be zero-fee. According to Nikkei, prospective J-Coin wallet users will not be required to undergo credit checks and the service will be open to users below the age of 18. J-Coin wallets will also serve a more flexible range of payments and remittance services than traditional bank accounts. Mizuho Financial Group reported over $1.8 trillion in total assets as of Dec. 31, 2018.

Mark Zuckerberg Considers Blockchain Authorization of Data in Recent Interview

Facebook CEO and founder Mark Zuckerberg considered the ramifications of blockchain-based authorization of user data during an interview with Harvard Law professor Jonathan Zittrain. During a discussion covering such topics as the future of technology and society, Zuckerberg noted that he “think[s] about the work we [Facebook] are a decentralizing force in the world.” Zuckerberg mentioned that he was considering a potential blockchain use case by which users could have control over their data, adding “Basically, you take your information, you store it on some decentralized system and you have the choice to log into places without going through an intermediary.” He said that one example of how the company is moving toward a more decentralized structure is through offering encryption in its messaging services. Zuckerberg outlined the benefits of encryption like privacy and security.

ConsenSys Backs Ethereum-Based Unlisted Infrastructure Investment Startup Allinfra

Ethereum (ETH) blockchain-focused development company ConsenSys has invested in an infrastructure investment startup, Allinfra. Allinfra will rely in part on ConsenSys’ technological capabilities and expertise in the tokenized assets area. The exact amount of the investment has not been disclosed. Allinfra facilitates direct investments in unlisted infrastructure assets via the Ethereum blockchain, providing users with the ability to create, purchase and transfer economic or ownership interests in these assets. As per ConsenSys, the solution makes the sector available not only to large institutional investors, but to a broader audience of investors. “In the case of unlisted infrastructure, a traditionally restricted, and illiquid asset class, Allinfra will enable a wider audience to efficiently access and participate in the economic benefits of these assets”  said Joe Lubin, Ethereum co-creator and ConsenSys founder. Dave Sandor, Co-founder and CEO of Allinfra, revealed that within several months the company “will be in the market supporting a flagship infrastructure tokenization project.”

• The main takeaway from the FOMC Minutes was that the Fed is going to be patient in raising rates and is likely to stop reducing the assets on its balance sheet later this year. The surprise – or maybe the important revelation – for the market to consider was the implication that the Fed could turn away from a “patient” mindset with raising interest rates if market uncertainty abates.
• Separately, there was little news on the current U.S-China trade talks, but investors did get an update on trade negotiations with the EU. Trump expressed his displeasure with talks, telling reporters that if the U.S. cannot make a deal with EU, the White House will impose auto tariffs.
• U.S. Treasuries were little changed during Wednesday’s session. The 2-yr yield and the 10-yr yield finished flat at 2.50% and 2.65%, respectively. The U.S. Dollar Index was unchanged at 96.55. WTI crude rose 1.2% to $57.15/bbl.

• S&P 500 increased 0.18% on Wednesday, as the minutes from the Fed’s January meeting came in mostly in-line with expectations. Price action, overall, was kept in check with earnings reports driving the notable movers in the stock market.
• The S&P 500 materials (+1.7%), financials (+0.6%), and industrials (+0.5%) sectors outperformed the broader market. Conversely, the real estate (-0.7%), health care (-0.1%), consumer staples (-0.1%), and communication services (-0.1%) sectors finished in the red.
• The minutes, along with the EU trade update, contributed to some volatility that yielded modest losses for the major averages. Investors regrouped, however, lifting the averages back into the green to extend the stock market’s lengthy rally.Semiconductor stocks outperformed, driven in part by an upbeat earnings report from Analog Devices (ADI 106.82, +2.60, +2.5%). Their outperformance helped keep the Philadelphia Semiconductor Index (+0.9%) rally going and provided some support for the information technology sector (unch). On the other hand, CVS Health (CVS 64.22, -5.66, -8.1%) and Southwest Airlines (LUV 54.41, -3.26, -5.7%) disappointed investors with some downside guidance. Specifically, CVS guided earnings for Q1 and fiscal 2019 below estimates, and Southwest Airlines cut its first quarter unit revenue guidance to 3-4% growth, year-over-year, from 4-5% growth.
• The outsized loss from CVS weighed on the health care sector (-0.1%). Airline stocks also underperformed on concern other carriers could follow suit with unit revenue revisions of their own.

BLOCKCHAIN & CRYPTOCURRENCY NEWS

Spain’s Largest Telecom Company Seeks Entrepreneurs in Blockchain, AI

Spain’s largest multinational telecommunications company, Telefónica, has announced an initiative to support entrepreneurs in innovative technologies, such as blockchain and artificial intelligence (AI). The Madrid-based company, also one of the largest telephone operators and mobile network providers in the world has launched its first “Open Innovation” call of this year via its tech incubator subsidiary, Telefónica Open Future. The month-long initiative seeks to support startups and innovative projects ready to “revolutionize traditional ecosystems through new technologies,” such as blockchain, AI, virtual reality and big data. Telefónica Open Future is a global platform that aims to connect public and private institutions focused on innovation and entrepreneurship. The call for entrepreneurs will be open until March 20 and the selected startups will be promoted and supported by the Global Open Future network and Telefónica, underlines the press release.

US: Crypto Advocacy Group Encourages Financial Regulators to Foster Innovation

United States blockchain advocacy group the Chamber of Digital Commerce has encouraged two major financial regulators to foster blockchain innovation. The group has reportedly provided comments to the Commodity Futures Trading Commission (CFTC) and the Consumer Financial Protection Bureau (CFPB) in different proceedings this week. Generally, the Chamber has asked both agencies to permit the introduction of new financial products based on blockchain technologies and to collaborate on efficient approaches that would promote investment and industry growth. In a separate letter to the CFTC, the group expressed support for the Commission’s previously launched initiative, dubbed LabCFTC, which examines fintech innovations. Also, the Chamber endorsed the CFTC’s commitment to learn more about the Ethereum (ETH) network, as well as the possibility to elaborate a framework for the introduction of ETH derivatives.

Binance Launches Decentralized Crypto Exchange Testnet

Major cryptocurrency exchange Binance has launched the testnet of its new decentralized exchange, Binance DEX. Per Binance, the exchange, powered by Binance Chain — a new blockchain and peer-to-peer (p2p) distributed system is already available for customers. Users can create wallets and start exchanging tokens on the Binance DEX testnet. Binance DEX will reportedly support secure decentralized software and hardware wallets. Binance’s Trust Wallet will also be integrated with Binance DEX, along with the Ledger Nano S. According to the press release, more compatible wallets will purportedly be added soon. Binance Coin (BNB) — which is currently an ERC20 token — will be moved to the Binance Chain in order to become a native asset. BNB is currently up over 12 percent over the past 24 hours, trading at $10.80 and ranked 10th largest coin by market cap by press time.

• New York Fed President Williams (FOMC voter) said mixed economic data has been a strong argument for a pause for further rate hikes, although he added that he expects to be drawing down the balance sheet for some time. Cleveland Fed President Mester (non-FOMC voter) for her part reportedly said she favors slowing the Fed’s balance sheet normalization effort, but said the fed funds rate may need to move a bit higher than current levels if the economy evolves as she expects. The market took the good and ignored the bad, which is all it has done so far in 2019.
• U.S. and China resumed trade negotiations in Washington. Trump said he believes China is intent on working quickly toward a deal to avoid a tariff hike on March 2. Trump reiterated a possible extension to the trade deadline, telling reporters that the March 1 deadline was “not a magical date.”
• U.S. Treasuries saw continued buying interest, driving yields lower across the curve. The 2-yr yield and 10-yr yield decreased two basis points each to 2.50% and 2.65%, respectively. The U.S. Dollar Index declined -0.4% to 96.52 amid strength in the euro. WTI crude rose 1.6% to $56.45/bbl.
• The best performing currency today was Sterling, which jumped more than 1% ahead of today’s meeting between May and Juncker. Although the European Commission continues to say they will not accept a time limit to the backstop, investors remain hopeful that a deal will be reached or an extension will be requested before the March 29th deadline. Juncker expects the talks to be friendly but the EU has been firm on denying changes to the withdrawal agreement and its wishful thinking to assume he will budge today. The EU’s strategy from day 1 is to run down the clock and force the government to accept the current deal or hold a second referendum.

• The S&P 500 increased 0.15% on Tuesday, as strong earnings results from Wal-Mart (WMT 102.20, +2.21, +2.2%) helped ease some concerns about consumer spending. Investors also remained optimistic about U.S.-China trade talks and a market-friendly Fed.
• Nine of the 11 S&P 500 sectors finished higher with materials (+0.6%), utilities (+0.5%), consumer staples (+0.5%), and consumer discretionary (+0.5%) outperforming. Conversely, the health care (-0.3%) and industrial (-0.1%) sectors were the lone groups to finish in the red.
• Wal-Mart’s earnings report was definitely good news for investors. An earnings beat and healthy same-store sales growth from the Dow component helped spur gains in the consumer staples (+0.5%) and consumer discretionary (+0.5%) sectors. Its strong earnings report helped temper concerns about a slowdown in consumer spending that were fueled by the lousy Retail Sales report for December released last week. The SPDR S&P Retail ETF (XRT 45.58, +0.24) increased 0.5%.

BLOCKCHAIN & CRYPTOCURRENCY WRAP

Waste Management Firm Launches Blockchain Platform in UAE City

A blockchain-enabled waste permit portal will be launched in Sharjah, the United Arab Emirates (UAE). The blockchain-based waste permit portal will be jointly developed by environmental, recycling and waste management company Bee’ah and the Hamriyah Free Zone Authority (HFZA) — the city of Sharjah’s free trade zone. T he platform is the first in the city to employ blockchain technology to validate, process and store transactions. The platform will cut costs for customers applying for permits within HFZA as well as reduce permit-issuing time from several days to only a few hours. Khaled Al Huraimel, CEO of Bee’ah, said that he expects the technology “will not only facilitate seamless operations, but also increase trust between customers and operators.”

Japan: E-Commerce Giant Rakuten’s New Payment App Appears to Support Crypto

Japanese e-commerce firm Rakuten announced that a major update of its Rakuten Pay mobile app will be released on March 18, according to the firm’s 2018 earnings release. The app’s new structure appears to indicate that it will support cryptocurrency payments in addition to fiat. Rakuten — known informally as “Japan’s Amazon” includes the firm’s cryptocurrency exchange “Everybody’s Bitcoin” as part of a newly established payments subsidiary, Rakuten Payment. Though the app update does not explicitly note crypto support, the company’s specification that “all payment solutions” will be supported on the platform implies support for crypto payments as a part of its subsidiary, Rakuten Payment. Rakuten acquired Japanese crypto exchange Everybody’s Bitcoin in August 2018 in a $2.4 million deal. In its earnings release, Rakuten reported a net income for 2018 of about 141.9 billion yen (about $1.3 billion), a 28.4 percent year-over-year increase from 2017.

Japan’s Number Two Bank by Assets Completes R3 Blockchain-Based Trade Finance Trial

Japan’s second-largest bank by assets, Sumitomo Mitsui Banking Corporation (SMBC), has completed a proof-of-concept (PoC) using blockchain consortium R3’s Marco Polo trade finance platform. SMBC, which is the only Japanese bank participating in Marco Polo, said it had partnered with Japanese multinational Mitsui & Co. to enhance efficiency in trade processes. “[The] PoC was conducted between SMBC and Mitsui & Co. which aims to improve productivity in its trade operations, by testing modules such as Receivable Finance and Payment Commitment (Payment Undertaking).” Launched in 2017, Marco Polo is a joint venture between R3 and Irish tech firm TradeIX targeting trade finance utility using distributed ledger technology. Leveraging R3’s Corda technology, a total of 15 consortium member banks are currently participating in the Marco Polo consortium, including ING, NatWest and BNP Paribas.

• U.S. Banks were closed in celebration of Washington’s birthday. There were no notable prints out of the E.U. and U.K. as well.
• Trade talks between the US and China continue this week. Though signals continue to be positive, the parties are still far apart on key questions.
• In RBA minutes this morning, the bank cited that the “outlook for consumption continued to be one of the key uncertainties for the forecasts for the domestic economy”. The RBA joined other major central banks such as the Fed and the ECB in recently signalling growing caution around the world growth outlook.
• Still, the RBA is not rushing toward cutting interest rates, saying unemployment remains on a downward trajectory, while there are some signs of heat in the wages. Unemployment currently sits at its lowest levels in seven years. “Given that further progress in reducing unemployment and lifting inflation was a reasonable expectation, members agreed that there was not a strong case for a near-term adjustment in monetary policy,” the minutes said.
• Financial markets have priced in a strong probability that interest rates will be cut before the end of the year as the RBA eventually reacts to slowing GDP growth, subdued inflation and rising unemployment.
• The job market will be a major determinant of the RBA’s actions, with any hint of rising unemployment likely to fan talk of imminent interest rate cuts.

• U.S. Markets were closed.

BLOCKCHAIN & CRYPTOCURRENCY UPDATES 

Argo Blockchain Plans to Terminate Mining Contracts, Cut Costs by 35 Percent

United Kingdom-based cryptocurrency mining provider Argo Blockchain announced it was refocusing its business as part of a major cost-cutting exercise. Argo, which is headquartered in London with facilities in Quebec, said it would terminate its Mining-as-a-Service (MaaS) operations by April, focusing solely on direct mining. MaaS operators facilitate cryptocurrency mining on borrowed hardware remotely. Explaining its decision, Argo said the ongoing suppression of Bitcoin (BTC) prices and associated reduced profitability of mining had caused it to slim down its expenses sheet. Along with abandoning MaaS, Argo plans to reduce costs by over a third in order to meet its profitability target. CEO and co-founder Mike Edwards summarized: “While it is disappointing to make this shift after delivering better-than-expected growth during our first six months as a consumer business, we need to be prudent and act decisively in order to ride out the downturn and be in a strong position when industry fundamentals improve.”

Major Canadian Exchange Coinsquare Acquires Zero-Fee Payment Network StellarX

Major Canadian crypto exchange Coinsquare has acquired StellarX, a Stellar (XLM)-based zero-fee decentralized payment network. According to the announcement, Bermuda-based StellarX will be a fully owned subsidiary of Coinsquare and will seek regulatory approval to operate and expand its service under Coinsquare’s compliance. The new acquisition has followed Coinsquare’s recent purchase of private Stellar wallet BlockEQ in December 2018. The firm is reportedly set to be rebranded to become the anchor wallet for the StellarX platform. Originally announced in July 2018, StellarX rolled out its full operation on Sept. 28, 2018. The company positions itself as fiat onramp, as it allows users to deposit fiat money directly from their bank accounts, as well as lists digital tokens for a number of fiat currencies including the euro, Chinese yuan, Hong Kong dollar, the British pound and others.

Liechtenstein’s Postal Service to Offer Crypto Exchange Services at Physical Locations

Liechtensteinische Post AG, the country’s official postal service, plans to offer cryptocurrency exchange services at their physical locations. The postal service will allow customers to exchange their fiat to Bitcoin (BTC) in one of its offices in Vaduz, the country’s capital, starting on Feb. 15. After purchasing BTC, the customers will get a physical wallet generating public and private keys. Later, the service will likely be extended to other post offices all over the country, the announcement notes. Moreover, the postal service wants to add support for other coins, including Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH) and Ripple (XRP). To introduce the service, Liechtenstein’s post has partnered with Värdex Suisse AG — a Swiss-based financially regulated blockchain and payment service provider. Switzerland and Liechtenstein are among the countries with the highest level of crypto adoption in the world. Liechtenstein introduced its crypto legislation in early 2018 when prime minister Adrian Hasler announced that the country will regulate blockchain business models and underlying blockchain systems.

 NOTABLE MOVES

As of Sat, Feb 16, Singapore Time zone UTC+8

USDJPY, +0.01%, $110.50
EURUSD, -0.05%, $1.1295
GBPUSD, +0.65%, $1.2896
USDCAD, -0.41%, $1.3241
AUDUSD, +0.57%, $0.7146
NZDUSD, +0.42%, $0.6866

S&P500, +1.09%, 2,775.60
Nasdaq, +0.61%, 7,472.41
Nikkei Futures, -1.37%, 20,900.0    

CURRENCY MARKET WRAP  

• The University of Michigan’s preliminary index of consumer sentiment for February increased to 95.5 (consensus 93.3) from the final reading of 91.2 for January, as attitudes improved with the end of the partial government shutdown and the Fed hitting the pause button on its interest rate hikes.The key takeaway from the report is the indication that consumers’ long-term inflation expectations fell to the lowest level recorded in the past half century, which is a vantage point that is certain to register in the Fed’s willingness to be patient with its policy approach.
• A week-long round of trade negotiations in Beijing came to a conclusion on Friday, although structural issues – forced technology transfers, enforcement oversight, and China subsidizing domestic industries – were unresolved. Still, investors were pleased to hear that mid-level talks are expected to continue in Washington next week. Trump expressed optimism, saying talks are going extremely well, while he continued to weigh the possibility of extending the March 1 deadline. Trump signed a bipartisan funding resolution, which included funding that was well short of the $5.7 billion requested for border security. As many thought he might, Trump declared a national emergency, setting up a likely legal battle, to secure adequate funding from other departments to build a border wall.
• U.S. Treasuries edged lower, pushing yields slightly higher. The 2-yr yield increased two basis points to 2.52%, and the 10-yr yield increased one basis point to 2.67%. The U.S. Dollar Index decreased -0.1% to 96.90. WTI crude rose 2.0% to $55.56/bbl

STOCK MARKET WRAP 

• The S&P 500 gained 1.09% on Friday, as investors were relieved to hear that U.S.-China trade-talks produced some progress and that Congress passed a funding resolution to avoid another government shutdown. Friday’s advance increased the benchmark index’s weekly gain to 2.5%.
• All 11 S&P 500 sectors finished higher, led by gains in financials (+2.0%), energy (+1.6%), and health care (+1.5%). Conversely, the utilities (+0.3%) and communication services (+0.4%) sectors underperformed but still finished with modest gains.
• Shares of Newell Brands (NWL 17.16, -4.53, -20.9%) and Mattel (MAT 13.82, -3.09, -18.3%) were clobbered on Friday following disappointing guidance, both of which included weak fiscal 2019 guidance.

Major Canadian Exchange Coinsquare Acquires Zero-Fee Payment Network StellarX

Major Canadian crypto exchange Coinsquare has acquired StellarX, a Stellar (XLM)-based zero-fee decentralized payment network. According to the announcement, Bermuda-based StellarX will be a fully owned subsidiary of Coinsquare and will seek regulatory approval to operate and expand its service under Coinsquare’s compliance. The new acquisition has followed Coinsquare’s recent purchase of private Stellar wallet BlockEQ in December 2018. The firm is reportedly set to be rebranded to become the anchor wallet for the StellarX platform. Originally announced in July 2018, StellarX rolled out its full operation on Sept. 28, 2018. The company positions itself as fiat onramp, as it allows users to deposit fiat money directly from their bank accounts, as well as lists digital tokens for a number of fiat currencies including the euro, Chinese yuan, Hong Kong dollar, the British pound and others.

Liechtenstein’s Postal Service to Offer Crypto Exchange Services at Physical Locations

Liechtensteinische Post AG, the country’s official postal service, plans to offer cryptocurrency exchange services at their physical locations. The postal service will allow customers to exchange their fiat to Bitcoin (BTC) in one of its offices in Vaduz, the country’s capital, starting on Feb. 15. After purchasing BTC, the customers will get a physical wallet generating public and private keys. Later, the service will likely be extended to other post offices all over the country, the announcement notes. Moreover, the postal service wants to add support for other coins, including Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH) and Ripple (XRP). To introduce the service, Liechtenstein’s post has partnered with Värdex Suisse AG — a Swiss-based financially regulated blockchain and payment service provider. Switzerland and Liechtenstein are among the countries with the highest level of crypto adoption in the world. Liechtenstein introduced its crypto legislation in early 2018 when prime minister Adrian Hasler announced that the country will regulate blockchain business models and underlying blockchain systems.

Grayscale Q4 2018 Report: Institutional Investors Provide 66% of Capital Inflow

Digital asset management fund Grayscale Investments latest crypto investment report released on Feb. 14 reveals that capital inflow from institutional investors is on the rise. For Q4 2018, Grayscale reports that institutions accounted for the majority of investments — at 66 percent. As well, investors were almost exclusively based in the United States (99 percent), although full year statistics indicate a more distributed geography, with 33 percent offshore investors to 67 percent U.S.-based. Grayscale notes that the protracted bear market has drawn clients whose perspective is long term: the high percentage of retirement accounts (40 percent) points to a multi-year investment horizon. Moreover, while dollar investments in crypto declined in Q4, Grayscale contends that institutional investors’ percentage allocation of their portfolio into the crypto sector remained roughly consistent throughout 2018. Overall, the fund notes there has been a deceleration of new inflows into crypto products quarter-over-quarter in 2018: nonetheless, with Q4 investments at $30.1 million, Grayscale products hit a value of $359.5 million for the entire year — nearly twice the inflows of the previous four years (2014-17) combined.