WALL STREET PAYDAY: Banks could make more than $100 million in fees from the massive United Technologies acquisition

• Alex Morrell
 

• 18h
• 1,454

Plenty to celebrate for the bankers on this lucrative deal.Anne-Marie Sorvin-USA TODAY Sports

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United Technologies announced its $30 billion acquisition of Rockwell Collins Monday, in a deal that would create one of the largest airline-equipment suppliers in the world. 

The final $140-a-share price tagthat United Technologies paid represents an 18% premium over the $119 Rockwell was trading at before deal rumors surfaced in early August, according to Reuters. 

Wall Street bankers are set to make a fat payday of as much as $105 million on the mega-deal. 

Morgan Stanley will haul in an estimated $35 million to $45 million for advising United Technologies, according to Jeffrey Nassof, director of consulting firm Freeman & Co.

JPMorgan and Citigroup will share an estimated $45 million to $60 million for advising Rockwell Collins. 

The airplane parts makers, which spent the last month trying to reach a deal, are expected to have combined sales of nearly $70 billion in 2017.

The deal is expected to close in the third quarter of 2018. 

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Russia's inflation drops to its lowest level since the collapse of the Soviet Union

• Elena Holodny
 

• Sep. 5, 2017, 10:08 AM
• 969
 

A customer shops at a Victoria supermarket operated by Russian food retailer Dixy Group in Moscow, Russia, October 20, 2016.Maxim Zmeyev/Reuters

Russia's inflation dropped to a post-communist low.

Inflation fell to 3.3% year-over-year in August, according to the country's state statistics service.

That's the lowest reading in the post-USSR era, according to data from Trading Economics.

Economists surveyed by Bloomberg expected a reading of 3.7%, following up on July's 3.9%.

"[W]e expect the headline rate to remain below the central bank's 4% target over our forecast horizon," according to William Jackson, senior emerging markets economist at Capital Economics, in a note to clients.

Looking under the hood of the data, food inflation fell to 2.6% year-over-year from the prior month's 3.8%. Non-food goods inflation dropped as well.

"Against this backdrop, we remain confident with our forecast that the central bank will cut the policy interest rate to 8.0% by the end of this year and to 6.0% by end-2018, from 9.0% now," Jackson added. "This is more easing than the markets are currently pricing in."

His team forecasts that the central bank will cut rates by 50 basis points at its next meeting, which will be next week on September 15. 

Trading Economics

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Traders are increasingly worried that the US government may soon run out of ways to pay its bills

• Akin Oyedele
 

• 2h
• 1,277

 More Charts

 
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The bond market continues to reflect fears that the US government may soon run out of funding.

A $20 billion auction on Tuesday for Treasury bills that expire in four weeks — just after the deadline for a bill to fund the government — drew the highest yield since the 2008 financial crisis. For some perspective, the high yield, at 1.30%, was higher than when the government shut down in 2013. This indicates that bond traders want a premium in return for expecting the government to repay them just as it may be running out of funding.

The auction results were "ghastly," according to Ward McCarthy, the chief financial economist at Jefferies.

"The October 5th maturity date for this auction turned off a lot of investors due to debt ceiling concerns," he said in a note.

Yields on existing bills that expire in October jumped by more than 4 basis points after the auction, according to Bloomberg.

By the end of September, Congress must pass a bill to keep the government funded, or it risks a shutdown of nonessential functions. It must also raise the debt ceiling by early October to prevent breaching it and to avoid a default.

The auction came on a strong day for Treasurys and other safe-haven assets following North Korea's nuclear test over the Labor Day weekend. The yield on the benchmark 10-year note fell 8 basis points, to 2.07%, the lowest since the day after the 2016 election.

As this chart from Deutsche Bank shows, the yield on bills expiring during the likely period of the debt-ceiling showdown is higher than comparable bills during previous episodes:

Deutsche Bank

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In Search of the Bankers' Brain (Video)

In Search of the Bankers' Brain

2013 , 

The disastrous impact of the 2008 financial crisis still lingers today. What lessons have been learned and which steps are being taken to prevent future economic catastrophe? The informative new documentary In Search of the Bankers' Brain investigates the continuing effect of the crisis on London's economy, and profiles the mysterious bankers who have yet to rectify their corruptive ways.

The content of the film stems from the work of Joris Luyendijk, a journalist for The Guardian whose far-reaching blog focuses on matters related to finance and banking. "We know more about ancient Egypt than about the people who currently shape our lives," he observes. Luyendijk's efforts seek to unmask the key bankers, investment managers, risk management personnel, traders and hedge fund high rollers who can make or break a nation's economy.

The film also features interviews with former players of the financial game who have now embraced their status as industry whistleblowers. They all testify to a system that's sick with unregulated greed and rewards the truly ruthless with unimaginable wealth. We learn how they manage to operate in relative anonymity, and the tricks and triggers they employ to excel in their line of work.

The film's central thesis, however, regards the chemistry of greed. A psychologist chimes in to share insights on the effects of greed on the brain, and explains the cerebral characteristics that define many of the most successful masters of banking and investments. It's not a flattering portrayal; in fact, the film pulls no punches by labeling these subjects as psychopaths. They possess a level of deviance and superficiality that makes them ideally suited for victory in today's excessive and permissive financial climate. If they should incur defeat, many will resort to suicide.

Many documentaries have tackled the subject of the financial crisis over the years. In Search of the Bankers’ Brain is a work of distinction because it approaches the topic from an entirely unique perspective. By exploring the neurological components of those who rise to the top of the financial sector through questionable practices, we can better understand the corrosive culture that empowers them every step along the way.

Directed by: Jos de Putter

Here's why China's crypto crackdown is 'bigger than most people think'

• Oscar Williams-Grut
 

• 4h
• 2,601

• China announced a crackdown on "ICOs" — issuing of new virtual currencies;
• Wording of edict makes all cryptocurrency trading illegal, according to eToro China exec;
• Others dispute interpretation, as Chinese exchanges continue to operate.

An investor looks at an electronic screen at a brokerage house in Hangzhou, Zhejiang province, January 26, 2016. REUTERS/China Daily

LONDON — China's crackdown on "initial coin offerings" may be much wider than first thought, with the wording of the crackdown potentially making all cryptocurrency trading illegal.

However, other watchers of the space say the government is not looking to crackdown on digital currencies like bitcoin and ethereum.

The People's Bank of China (PBoC) on Monday outlawed ICOs, a method of raising money by issuing new digital currencies. The trend has become hugely popular, with over $1.5 billion raised using this method in 2017 alone.

However, the wording of the PBoC edict also suggested that trading and usage of all cryptocurrencies, including bitcoin, could now be illegal in China.

The PBoC said that virtual currencies that are "not issued by the monetary authorities... do not have legal status equivalent to money, and can not and should not be circulated as a currency in the market use."

The PBoC added that "any so-called tokens financing trading platform shall not engage in the exchange of legal currency and tokens." It even goes so far as to ban platforms from "provid[ing] pricing, information, [and] intermediary services."

Adam Efrima, the operations director of trading platform eToro in China, described the ruling as a "huge deal," saying: "It's bigger than most people think it is."

Efrima, who first alerted Business Insider to the far reaching nature of the PBoC ruling, said: "I don't think the Chinese government are against blockchain and high-level blockchain development, I think what they're trying to do is take down scammers."

But he added: "Cryptocurrency related exchanging and trading activities are officially forbidden. If you interpret the law literally then you cannot engage in any crypto exchange — crypto-to-crypto or crypto-to-fiat."

Wong Joon Ian, the cryptocurrency reporter for Quartz, reports that most Chinese exchanges have notified customers on WeChat that bitcoin trading will continue despite Monday's ICO ruling.

cnLedger, a Twitter account for cryptocurrency news in China, also disputes eToro's interpretation of the ruling.

8h

cnLedger @cnLedger

1/ PBoC bans ICO. From now on no organizations / persons in China are allowed to raise funds via ICOs.http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/index.html …

 Follow

cnLedger @cnLedger

5/ To clarify, in the notice PBoC used two different notions: Crypto-Currency (BTC, ETH) and Tokens. ICO ban =/= Crypto-Currency ban.

2:33 AM - Sep 4, 2017

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Charles Hayter, the CEO and founder of CryptoCompare, told Business Insider: "These are generally left open to interpretation and a lot of uncertainty reigns in the meantime, until clarification is given by the authorities."

Efrima told Business Insider: "What we're seeing in the market is a lot of Chinese people in the market getting scared."

Efrima said he now expects a regional crackdown on Chinese operators as municipalities follow the PBoC's lead and issue bylaws.

Commenting on the effects the law could have on the global ICO market, Efrima said: "It's huge. There's not a quality project that's not doing a road show in China right now. An educated guess is that this will be very, very negative."

Ethereum is down over 15% against the dollar on Monday afternoon.

Efrima added: "In the long run, it might be good as there'll be less projects and less scams and that could support the price of Ethereum."

Separately on Monday South Korea also announced a crackdown on digital currencies. Business Korea reports that a government task force on Sunday concluded that "digital currencies cannot be considered money and currency, nor financial products," and pledged to "strengthen levels of punishment," for ICOs.

Get the latest Bitcoin price here.

SEE ALSO: China just banned initial coin offerings, calling them illegal fundraising

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