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Blockchain Technology Explained: Powering Bitcoin

Microsoft recently became the latest big name to officially associate with Bitcoin, the decentralized virtual currency. However, the Redmond company did not go all out, and will only support bitcoin payments on certain content platforms, making up a tiny fraction of its business.

What’s The Big Deal With Bitcoin?

Like most good stories, the bitcoin saga begins with a creation myth. The open-source cryptocurrency protocol was published in 2009 by Satoshi Nakamoto, an anonymous developer (or group of bitcoin developers) hiding behind this alias. The true identity of Satoshi Nakamoto has not been revealed yet, although the concept traces its roots back to the cypher-punk movement; and there’s no shortage of speculative theories across the web regarding Satoshi’s identity.

Bitcoin spent the next few years languishing, viewed as nothing more than another internet curiosity reserved for geeks and crypto-enthusiasts. Bitcoin eventually gained traction within several crowds. The different groups had little to nothing in common – ranging from the gathering fans, to black hat hackers, anarchists, libertarians, and darknet drug dealers; and eventually became accepted by legitimate entrepreneurs and major brands like Dell, Microsoft, and Newegg.

While it is usually described as a “cryptocurrency,” “digital currency,” or “virtual currency” with no intrinsic value, Bitcoin is a little more than that.

Bitcoin is a technology, and therein lies its potential value. This is why we won’t waste much time on the basics – the bitcoin protocol, proof-of-work, the economics of bitcoin “mining,” or the way the bitcoin network functions. Plenty of resources are available online, and implementing support for bitcoin payments is easily within the realm of the smallest app developer, let alone heavyweights like Microsoft.

Looking Beyond The Hype – Into The Blockchain

So what is blockchain? Bitcoin blockchain is the technology backbone of the network and provides a tamper-proof data structure, providing a shared public ledger open to all. The mathematics involved are impressive, and the use of specialized hardware to construct this vast chain of cryptographic data renders it practically impossible to replicate.

All confirmed transactions are embedded in the bitcoin blockchain. Use of SHA-256 cryptography ensures the integrity of the blockchain applications – all transactions must be signed using a private key or seed, which prevents third parties from tampering with it. Transactions are confirmed by the network within 10 minutes or so and this process is handled by bitcoin miners. Mining is used to confirm transactions through a shared consensus system, and usually requires several independent confirmations for the transaction to go through. This process guarantees random distribution and makes tampering very difficult.

Enlarge

While it is theoretically possible to compromise or hijack the network through a so-called 51% attack the sheer size of the network and resources needed to pull off such an attack make it practically infeasible. Unlike many bitcoin-based businesses, the blockchain network has proven very resilient. This is the result of a number of factors, mainly including a large investment in the bitcoin mining industry.

Blockchain technology works, plainly and simply, even in its bitcoin incarnation. A cryptographic blockchain could be used to digitally sign sensitive information, and decentralize trust; along with being used to develop smart contracts and escrow services, tokenization, authentication, and much more. Blockchain technology has countless potential applications, but that’s the problem – the potential has yet to be realized. Accepting bitcoin payments for Xbox in-game content or a notebook battery doesn’t even come close.

So what about that potential? Is anyone taking blockchain technology seriously?

Opinion column by Nermin Hajdarbegovic, Technical Editor @ Toptal. You can read the article in this link.

Hopes and Fears, Which will Triumph in 2017?

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There was a significant outburst of enthusiasm from the financial markets, especially the equity markets, following the U.S. election result last November. The S&P 500 rallied by 3.5%, led by financials, industrials and cyclical stocks, and many other markets around the world also enjoyed a rebound.

Today, expectations are, as Donald Trump would say, “Huge.” The “animal spirits,” famously described by economist John Maynard Keynes, have been unleashed, or so it seems. Indeed, at the end of last week the Dow Jones Industrial Average broke through the 20,000 mark for the first time. And the VIX volatility index fell to its lowest level since July 2014. Is this the triumph of hope over fear, or are investors getting carried away with themselves?

Paradigm Shift

To be sure, there’s much to be positive about. Change is in the air and there’s a paradigm shift in the U.S. economy that’s almost palpable. Consumer confidence in the U.S. is ticking up, as is CEO confidence. U.S. small business confidence, for example, is at its highest level since 1994. This higher confidence, if translated into action, should lead to greater economic risk-taking as CEOs look to reinvest in their businesses after years of keeping their powder dry.

The much-vaunted U.S. infrastructure spend is also grabbing headlines, with excited talk of new investment in transport, telecoms and energy, among other areas. Again, this should lead to meaningful growth. And the planned reform of both corporate and individual tax rates should prove a boon for both companies and consumers.

Elsewhere, CEOs have long complained about the growing financial regulatory burden and the role of the Environmental Protection Agency. Both are in the new administration’s sights.

Turning to monetary policy, central banks have already done much of the heavy lifting, but their impact has diminished in recent years. What we’re seeing now is a gradual shift away from monetary stimulus to fiscal stimulus. The knock-on effect of this is the return of inflation and higher interest rates. Indeed, there is an expectation of two, maybe three, interest rate rises by the Federal Reserve this year. In short, we’re beginning to see the return of the business cycle and economic expansion – something we last saw way back in 2007/2008.

Tough Medicine

So what‘s the downside?

Without wishing to pour cold water on the current market exuberance, it’s worth noting that, after the November bounce, markets were relatively flat in December and the first three weeks of January. While U.S. asset prices may have risen, the real economy has not done quite as well. Indeed, amidst all the enthusiasm, there’s an underlying anxiety about how much the new Trump administration can actually accomplish. The implementation of new tax laws, regulatory reform and infrastructure policy, for example, will take much time and effort, and the process may run well into 2018. That said, we do believe these policy changes will have a positive long-term effect on GDP growth, and, importantly, earnings growth.

One of the most challenging issues, however, will be health care reform. It’s an important item on President Trump’s agenda and his administration will focus meaningful efforts on it. However, it won’t be easy to repeal and replace Obamacare. It’s an enormous piece of legislation to unwind and it’s not yet clear quite how they’re going to do it. Nor do we know what impact, if any, it will have on the health and pharmaceutical sectors.

Meanwhile, the surge in nationalism doesn’t bode well for global trade. Protectionism has been on the rise for a number of years and looks set to continue. The developments in Europe, in particular, concern us and the elections in France and Germany later this year could yet spook markets. Few investors predicted the U.K.’s “Brexit” vote, for example, and a year ago Donald Trump was viewed as a long shot.

Taken collectively, these issues raise the possibility of setbacks and disappointments along the way. Indeed, this year we’re likely to experience a bumpy ride. But my advice to investors is to focus on the long term, while remaining mindful of the risks and possible setbacks along the way.

Neuberger Berman’s CIO insight

Franklin Templeton Investments Launches First Actively Managed International Equity ETF

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Franklin Templeton Investments has introduced a new actively managed international equity ETF to its Franklin LibertyShares platform. Franklin Liberty International Opportunities ETF (FLIO) provides investors with broad and diversified access to international equity markets outside the U.S., spanning developed, developing and frontier markets, and across sectors and market capitalizations. FLIO is being listed on NYSE Arca on January 27, 2017.

“The launch of Franklin Liberty International Opportunities ETF marks our first actively managed international ETF and continuing expansion of our LibertyShares offerings,” said Patrick O’Connor, the firm´s Global Head of ETFs. “With over 75 percent of the world’s GDP coming from countries outside the U.S., investing internationally can provide portfolio diversification, which can reduce overall risk. As we believe successful international investing can benefit from combining a global investment perspective with local presence and insights, we are leveraging fundamental research from our local asset management and emerging markets teams around the world in managing this new ETF.”

The ETF is co-managed by Stephen Dover, CFA, CIO for Franklin Templeton Local Asset Management and Templeton Emerging Markets Group, and Purav Jhaveri, CFA, managing director of investment strategy for the Local Asset Management group. They draw upon the research and perspectives of over 80 investment professionals comprising the firm’s 14 local asset management teams globally, who provide on-the-ground insights on local market conditions, dynamics and valuations and timely perspective on market events, risks and opportunities. The fund’s managers also leverage the expertise of Templeton Emerging Markets Group’s more than 50 investment professionals for further insight into emerging countries, an area of the market that they believe is critical to international equity portfolios, given its importance to future growth potential.

In constructing a diversified portfolio of companies, the fund’s managers focus on key attributes that foster their high conviction, including:

Focus on quality
Superior earnings growth
Low financial leverage
Strong management track record

Franklin LibertyShares’ actively managed ETFs strive to outperform their benchmarks. Portfolio managers have the flexibility to respond, with discretion, to market events and operate outside the confines of traditional benchmark indices.

“Investors who have embraced the ETF wrapper for its benefits—which may include liquidity, tax efficiency and transparency—want the opportunity to seek better risk-adjusted returns over the long term,” said David Mann, Head of Capital Markets, Global ETFs. “Franklin LibertyShares provides investors with simple and efficient options to help them address their desired outcomes. Our actively managed ETFs, which now include Franklin Liberty International Opportunities ETF, can help investors meet their investment needs by serving as a core or complementary portfolio holding.”

Franklin LibertyShares has more than $545 million in assets under management as of January 24, 2017.

State Street Global Exchange Names John Plansky to Global Head

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State Street Corporation has announced that John Plansky will be named global head of State Street Global Exchange. In this role, Plansky will be responsible for global strategy, new product development and developing solutions for clients that help them manage increasingly complex data, search for better performance, focus on attracting assets and meet heightened risk challenges.

Plansky will report to Executive Vice President Lou Maiuri.

Plansky joins from PricewaterhouseCoopers (PwC) where he led the US Strategy business and US Global Platforms business and was a member of the Advisory Financial Services Leadership team. Prior to the acquisition of Booz & Co. by PwC, Plansky was a senior partner at Booz & Co. leading the Technology practice and serving as a senior advisor to global financial institutions such as State Street. Prior to joining Booz & Co., he was CEO of NerveWire and led its sale to Wipro where he subsequently led their global capital markets business. John has a degree in Biophysics, BS from Brown University.

“John has partnered with State Street in various roles over the past 16 years,” said Maiuri. “He has seen our evolution first hand and brings significant experience leading global teams, growing revenue, and integrating dozens of capabilities and skill sets to produce better client outcomes. As we continue to digitize our company, John will help State Street and our clients meet the data challenge.”

Tesla’s Giant Awakens

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On 4 January 2017 Tesla began producing its next generation lithium-ion battery cells at its enormous Gigafactory. Located in the Nevada desert, the factory will have the largest footprint of any building in the world when it is completed in 2020. To mark the commencement of production, Tesla hosted an on-site investor event where it reiterated its 2018 target of producing 35 gigawatt-hours (GWh) of battery cells and 50GWh of battery packs, enabling it to meet its 2018 production goal of 500,000 all-electric vehicles. At the event, Tesla also highlighted the productivity gains that it and its partner Panasonic have been able to achieve by using advanced engineering techniques and factory automation technology.

A zero carbon factory

The factory has been designed as a giant machine and its capacity is now expected to be three times greater than the original plan. Reflecting this, Tesla also announced a 2020 target of 150GWh of battery pack production, enough to support the production of 1.5 million vehicles. This level of battery production will have a material impact on reducing global demand for fossil fuels and therefore carbon emissions. The factory itself will also be zero carbon, thanks to its roof being entirely covered by solar panels, and an onsite battery reprocessing facility will allow battery cells to be recycled.

In addition to producing next generation batteries with higher energy density, the Gigafactory will result in material reductions to the cost of batteries. In many parts of the world, thanks to lower running and maintenance costs, electric cars are already competitive with gasoline cars on a total cost of ownership basis. With a 30% decline in battery costs they will become competitive on a list price basis.

Not just cars: storage solutions and solar tiles

It is not just about cars, however, with Tesla’s ambitions going far beyond manufacturing vehicles. The company’s mission is “to accelerate the world’s transition to sustainable energy”. We think many people overlook the fact that Tesla expects 50% of the Gigafactory output to go towards battery packs for stationary storage applications in residential, commercial, and utility end markets. Affordable batteries enable much greater penetration of renewable energy since the problem of the intermittency of wind and solar power is solved.

The partnership with Panasonic also extends to the manufacturing of solar cells incorporated into roofing tiles to create a solar product that will go on sale later this year.

We are fast approaching the inflection point where the cost of clean technologies is competitive with fossil technologies on an unsubsidised basis and the transition to a low carbon economy will be driven by market forces. Tesla is at the heart of this transition. It is attacking multiple industries – from fossil fuel production to power generation and transportation – and we believe it will be one of the great global growth stocks of the next decade. We think Tesla’s earnings could approach US$20 per share by 2020, which by our estimates implies the stock is currently trading on a 2020 price-earnings ratio of roughly 12x. And this is just the beginning: we expect more Gigafactories to be built and that Tesla will keep on growing.

Trump’s First Year – What’s Realistic

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One week from the inauguration of the 45th president and the market’s high expectations for policymaking, what is realistic for investors to expect from Washington in 2017?

Accordig to Libby Cantrill, PIMCO’s Head of Public Policy, and her team, the bottom line is that governing is harder than campaigning. They believe, any of the items that President Trump and congressional Republicans are looking to tackle in 2017 – a healthcare overhaul, tax reform, infrastructure – are inherently complex and time-consuming, even with Republican majorities in both chambers of Congress. So, while they expect policymakers to focus on advancing the Trump agenda, there is a good chance that some of these agenda items slip into 2018 given the realities of Washington.

Key policy initiatives

Obamacare: Repeal and replace? One of the primary issues of overlap between President Trump’s policy agenda and that of congressional Republicans is the repeal of Obamacare. However, there is less agreement about what comes after repeal – with Trump and some Republicans advocating for a “repeal and replace” approach, while other Republicans supporting “repeal and delay.”

If Trump’s approach is pursued – which seems more likely – it could have implications for the timing of the rest of his agenda. Healthcare policymaking is notoriously complex and time-consuming; it took Congress 14 months to pass Obamacare after holding more than 100 hearings in the Senate and 80 in the House, and Obamacare still managed to pass only on a party-line vote. Also, the committees in Congress that would be tasked to write at least part of the replacement bill will also be in charge of the tax reform bill, another complicated and formidable undertaking. Lastly, Trump has promised that a replacement bill will provide “insurance to everybody.” While Trump may walk back from these comments, the pressure for congressional Republicans to deliver a comprehensive, Trump-endorsed healthcare overhaul has increased, which might take longer (most of 2017?) than many expect.

Tax reform or tax cuts? Another area of agreement between Trump and congressional Republicans is the issue of addressing the country’s tax code to make it more competitive. However, there is less agreement about how to actually do this. House Republicans want to proceed with tax reform on the individual and corporate side, while Trump has put forth a plan that focuses on tax cuts. Tax reform – simplifying the tax code, lowering rates and broadening the base – is notoriously more difficult and time-consuming than tax cuts, since it necessarily results in winners and losers. Yet, many would argue that only tax reform – not tax cuts – at this point in the economic cycle would lead to real improvements in productivity and therefore sustainable economic growth. For this reason, they expect House Republicans to try to advance a tax reform package, at least initially.

“But there is a long way to go from here to there. No bill has yet been written, and it is not clear whether Senate Republicans are on the same page as House Republicans, especially when it comes to more controversial topics such as the “border adjustment tax,” which would tax imports and exempt exports. Assuming tax reform is pursued (not just tax cuts), it will likely take longer than most expect given its complexity and may be a smaller package (e.g., rates not lowered as much) depending on where Republicans fall out on different controversial issues (e.g., the border adjustment tax). While the market appears to be pricing tax reform to be completed in 2017, there is a real possibility we don’t see a bill passed and signed by President Trump until 2018.” Cantrill says.

Infrastructure: While this is a topic that President Trump discussed often on the campaign trail and one where there is generally bipartisan support, Trump has provided few policy specifics, and this is yet another issue where the devil is in the details. Given the ambivalence many Republicans have for increases in non-defense spending, Trump may need Democrats to help pass an infrastructure bill. It is not clear what the appetite for that would be among congressional Democrats. So this also could slip to 2018.

Trade: Unlike the aforementioned issues, which need congressional approval, the White House has significant discretion around trade. Indeed, one of the first actions President Trump was to withdraw the U.S. from the Trans-Pacific Partnership. While this move was expected, “Trump’s approach to trade broadly is unknown: Does he follow the advice of his U.S. Trade Representative Robert Lighthizer, who worked under President Reagan and will likely use a more carrot-and-stick approach with trading partners like China? Or will he follow the more extreme and protectionist advice of Peter Navarro, the head of the newly formed National Trade Council? At this point, we don’t know, and as such, trade remains the primary area for a more “left tail” (downside) outcome.” She concludes.

ETFs/ETPs Listed Globally Gathered Record Inflows at the End of 2016

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ETFGI, the leading independent research and consultancy firm on trends in the global ETF/ETP ecosystem, reported assets invested in ETFs/ETPs listed globally reached a new record high of US$3.546 trillion at the end of 2016 passing the prior record of US$3.444 trillion set at the end of November 2016.

In December, ETFs/ETPs gathered a record level of net inflows US$65.25 billion for December, marking the 35th consecutive month of net inflows. During 2016, ETFs/ETPs listed globally gathered a record amount of net inflows US$389.34 Bn surpassing the prior record of US$372.27 Bn gathered in 2015, according to preliminary data from ETFGI’s Year-end 2016 global ETF and ETP industry insights report.

Record levels of assets under management were reached at the end of 2016 for ETFs/ETPs listed in the United States at US$2.543 trillion, in Europe at US$571 billion. In Asia Pacific ex-Japan at US$135 billion, in Canada at US$84 billion and globally.

At the end of December 2016, the Global ETF/ETP industry had 6,625 ETFs/ETPs, with 12,526 listings, assets of US$3.546 trillion, from 290 providers listed on 65 exchanges in 53 countries.

“2016 was an eventful year with a number of unexpected outcomes – the UK vote for Brexit to leave the European Union and the election of Trump as the US President. The S&P 500 gained 12.0% while the DJIA increased 16.5% for the year. All US sectors performed positively for the year, with the exception of Health Care. The VIX declined by a dramatic 22.9%. European equities ended the year up 3.44% Canadian equities ended the year strongly with the S&P/TSX Composite and the S&P/TSX 60 were up 21.1% and 21.4%” according to Deborah Fuhr, co-founder and managing partner at ETFGI.

Asset gathering in December 2016 was very strong with ETFs/ETPs listed globally gathering net inflows of US$65.25 Bn setting a December monthly record. Equity ETFs/ETPs gathered the largest net inflows with US$63.28 Bn, followed by fixed income ETFs/ETPs with US$6.72 Bn, and active ETFs/ETPs with US$1.50 Bn, while commodity ETFs/ETPs experienced net outflows of US$4.24 Bn.

ETFs/ETPs listed globally gathered a record amount of net inflows US$389.34 Bn during 2016 surpassing the prior record of US$372.27 Bn gathered in 2015. Equity ETFs/ETPs gathered the largest net inflows during 2016 with US$231.91 Bn but less than the record US$258.21 gathered in 2015, followed by fixed income ETFs/ETPs which gathered a record level US$111.58 Bn passing the prior record of US$81.65 set in 2014, and commodity ETFs/ETPs which gathered a record level of US$30.85 Bn passing the prior record of US$23.44 Bn set in 2012.

iShares gathered the largest net ETF/ETP inflows in December with US$23.73 Bn, followed by SPDR ETFs with US$18.45 Bn and Vanguard with US$13.34 Bn net inflows.

In 2016, iShares gathered the largest net ETF/ETP inflows with US$138.40 Bn, followed by Vanguard with US$96.79 Bn and SPDR ETFs with US$62.47 Bn net inflows.

Signal-to-Noise Ratio

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Finding—and sticking to—the facts will be especially crucial for investors in the months ahead.

With the inauguration at our backs, it’s a good time to consider how, at a basic level, investors can make their way in the current frenetic landscape. One particularly apt term that comes to mind in the current context is the “signal-to-noise ratio.”

According to Wikipedia, “signal-to-noise” is “a measure used in science and engineering that compares the level of a desired signal to the level of background noise. It is defined as the ratio of signal power to noise power.” We have operated in and will continue to operate in an environment where the signal has been extremely low. It is therefore very difficult to figure out what the true signal is.

Not long ago, I heard a common refrain in my travels: “I can’t wait for the election to be over.” I agreed with the sentiment, and the notion was that all the crazy stuff we were seeing would die down and things would go back to normal.

At this point, I think it’s clear we’re not going back to whatever normal was. To the contrary, the level of partisan rancor concerning the issues of the day remains very high. Moreover, during the election we saw plenty of news that was light on facts and heavy on viewpoint, and that continues. Throw into the mix a new president who thinks out loud in real time and the reality of operating in a very low signal-to-noise ratio world for the foreseeable future is something an investor must confront. I’m afraid these are just realities of the new environment.
Employing a Filter

What can investors do? First, focus on important facts and employ a process for ignoring the noise.

Part of the challenge is that when you look at what the incoming administration has proposed, it’s a very ambitious agenda, focused on substantial reforms—to the tax code, the government’s role in health care, and immigration, among other things. These are truly complex issues. This is evident in all the reporting, noise and rhetoric around the tax code, specifically concerning the border tax adjustment proposal. It has dominated the financial news over much of the past week and is very hard to explain succinctly, so commentators latch onto scary, often misleading headlines. Sorting the facts from the noise is going to take real concentration moving forward.

For us, some of the most important facts are as follows: Of all the objectives in the new administration’s agenda, none is likely to have more impact on markets and the valuation of individual stocks and bonds than reforming the tax code. Given that, we are focused on the process of change, which is crafting legislation and who is working on it. It involves understanding the perspective of the authors and others who might have a meaningful influence, and the timeline to passage and implementation. It’s not clear how much transparency there will be, but I think a starting point for analysis has to be a document that’s been around for seven months: the House Republicans’ budget proposal. The question is, how much will remain by the time we get to the finish line.

Bring the Perspective of a Great Analyst

Second, process all news and information the way a great stock or bond analyst does when analyzing a company. I am fortunate to work with a lot of them here at Neuberger Berman, and they share a common approach. Data, facts and experience all trump opinion. But in markets, of course, opinion does matter. When assessing the viewpoint of a CEO, CFO or sell-side analyst, understanding the messenger’s track record, credibility and biases is paramount. The simple conclusion is that if you can’t check these boxes on a messenger, reject the message.

This decidedly does not mean seeking only viewpoints that mesh with your own—quite the contrary. I am a regular reader of Paul Krugman’s column precisely because he looks at economic and political issues from a viewpoint very different from my own. He expresses his views in a consistent and articulate fashion through time; I know where he is coming from.

Bring Historical Context

Finally, big issues of the day are usually just a point in time that are impossible to understand without a sense of the broad arc of history.

In the aftermath of the financial crisis, Carmen Reinhart and Kenneth Rogoff wrote a well-timed and insightful book called This Time Is Different: Eight Centuries of Financial Folly, which put in perspective the world-changing events we’d just experienced, and everyone in our business either read or should have read their observations.

Similarly, looming tensions with China on trade haven’t just emerged in the last couple years. Nineteen years ago, False Dawn: The Delusions of Global Capitalism, by Thatcherism architect John Gray, predicted that China’s form of capitalism would eventually collide with that of the West.

As for Russia, Putin’s adventures in Ukraine and Crimea are the culmination of more than 100 years of struggle with the West. I’d strongly recommend The Great Game: The Struggle for Empire in Central Asia, by Peter Hopkirk, written in 1992, to understand the dynamics at play.

Looking for that kind of perspective on whatever developments emerge could help investors find the relevant signals and avoid getting caught up in the noise that is sure to resonate throughout 2017.

Neuberger Berman’s CIO insight by Brad Tank

Rothschild & Co and Compagnie Financière Martin Maurel Have Merged

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The proposed merger between Rothschild & Co and Compagnie Financière Martin Maurel to create one of France’s leading independent private banks announced last June is now successfully complete. The merger will build upon the relationship that has existed between the Rothschild and the Maurel families for three generations. The operational integration of the two private banks Rothschild Patrimoine and Banque Martin Maurel should be finalized in the second half of 2017 so as to create a combined group operating under the name Rothschild Martin Maurel.

Rothschild Martin Maurel will be a leading independent family controlled private banking group operating in France, Belgium and Monaco, with a distinctive market positioning targeted notably at entrepreneurs. The group will have combined AUM of €34 billion, offer a particularly broad wealth management, asset management, financing and corporate finance advisory service and enjoy a greater geographic footprint in France.

Prior to this transaction, Rothschild & Co held 2.3% of Compagnie Financière Martin Maurel while the latter held 0.90% in Rothschild & Co. In accordance with the terms of the protocol signed in May 2016, the majority of the transaction was in the form of an exchange of shares on the basis of a parity of 126 Rothschild & Co shares per Compagnie Financière Martin Maurel share. The Maurel family received shares and reinforced its presence in the extended family concert of Rothschild & Co, of which it was already a member. The transaction was financed 62% by issuing 6.1 million new shares and 38% by external bank facilities of €88.3 million. The significant non-family shareholders of Compagnie Financière Martin Maurel had already agreed to tender their shares to the cash offer in accordance with the terms of the initial protocol.

David de Rothschild, Chairman of Rothschild & Co, said, “The combination of two family controlled businesses that share the same history, the same culture and the same vision of their industry, creates an outstanding company and we are delighted to celebrate this merger today. The transaction is in line with our strategy to accelerate our growth in private wealth and of focusing on annuity style revenues. I am pleased that the Maurel family will maintain its involvement alongside the Rothschild family in the new group.”

“Our two groups embody a family model that distinguish and strengthen us when compared to our competitors. This combination allows us to broaden the range of our offerings to all our clients, especially entrepreneurs, thanks to a strengthened and broader range of asset and wealth management products and services,”underlined Bernard Maurel.

Lucie Maurel Aubert said, “We will be able to develop these offers in Paris and also, thanks to our strong regional presence, in Lyon, Marseille, Aix en Provence, Grenoble and Monaco, while adding the skills of Rothschild and Co in financial advisory and merchant banking. This alliance will enrich our expertise benefitting our customers and our teams and enabling us to meet the challenges of the future with confidence”.

The listing of Compagnie Financière Martin Maurel’s shares has been suspended. With effect from 4 January 2017, the new shares of Rothschild & Co are admitted to trading on compartment A of Euronext Paris and the shares of Compagnie Financière Martin Maurel is delisted from the Marché libre of Euronext Paris.

Brexit: A Difficult But Attainable End-March Timetable

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The UK Supreme Court rejected the government appeal that it could trigger Article 50 without Parliamentary approval. Financial markets posted little reaction with the 2-year and 10-year yields barely moving on the announcement, however, sterling retreated by around 0.5%, which supported a modest pick-up in equities, with the FTSE 100 up 0.25% after the reaction. Responding to the ruling, David Davis, the Brexit secretary, said a bill to trigger article 50 would be published “within days”.

In itself, and according to Axa IM strategist, David Page, the rejection was expected, given the High Court decision. He believes that the sting has been removed from this decision by a Parliamentary vote in December to back Prime Minister May’s timetable by 461-89 on the condition that the government spelt out its negotiating objectives and Parliament got a final say on the vote. “PM May fulfilled the first part of this in her 12-point Brexit plan last week and committed to a Parliamentary vote at the end of the process.”

In his opinion, procedural difficulties may remain. The Supreme Court ruled that an Act of Parliament will be required to trigger Article 50. “There is a risk that procedural challenges and proposed amendments may make the end-March timetable challenging.” The Scottish National Party has already suggested an intention to amend the Act. However, the Court did rule that the government does not need to consult regional assemblies. “This removes one of the larger remaining potential hurdles for PM May’s ambitious timetable. As such, there is a good chance that PM May manages to trigger Article 50 according to her timetable of end March, with only some risk of a small procedural delay to this.” He concludes.