| | | | | | | | March 03, 2016 | | | | | First Impressions | | | A classic video from our archives:
Lee Hodgkinson, Euronext - Lessons from the 4-Minute Mile
JohnLothianNews.com
"Everything is possible; nothing is easy."
Roger Bannister, Clarence "Captain" Birdseye and Fedex founder Fred Smith all have one thing in common - they each proved that something previously declared "impossible" was not impossible, just really difficult. Whether it is the 4-minute mile, flash-frozen vegetables or getting a package delivered "absolutely, positively, anywhere overnight," it can be done, says Euronext UK CEO Lee Hodgkinson in this MarketsWiki Education talk. He says that achieving the impossible requires focus, persistence and determination.
Nothing is impossible, says Hodgkinson, except running slowly while moving your arms really fast, and trying to eat three donuts in one minute without licking your lips. Not even Roger Bannister could achieve that feat.
Watch the video »
| | | | | | Quote of the day: | | | | | | “ | "The UK's position as a world leading financial centre has been built on a long and hard-won reputation for fair dealing and high standards. The crisis showed starkly that standards had slipped, and they had to be raised. Paying more attention to Spiderman's personal code of conduct is a leap in the right direction."
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| ” | Anthony Browne, chief executive of the British Bankers Association, in the story, "Banks could learn a lot from Spider-Man"
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| | | | Lead Stories | | |
Diagnosing What Ails Europe's Biggest Banks
Yalman Onaran and Nicholas Comfort - Bloomberg
European banks are having a hard time making money. The 12 largest lenders earned 18¢ on average for every $100 in assets last year, while their six biggest U.S. rivals made 92¢. Three European giantsÂCredit Suisse, Deutsche Bank, and Royal Bank of ScotlandÂeach racked up billions of dollars in losses in 2015. RBS has lost money every year since the 2008 crisis.
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Rate swap conspiracy charges grow
Mike Kentz - International Financing Review
Allegations that 12 of the world's biggest banks conspired to control interest rate swaps markets from 2007 to 2015 intensified last week as further details regarding meetings and actions allegedly taken by banks to maintain their hold on swaps pricing were added to an existing lawsuit.
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Why are banks buying back their own debt?
Thomas Hale - Financial Times
A number of European banks, including Barclays, Lloyds and Deutsche Bank, have offered to buy back their own bonds this year, as part of their "liability management". Various factors are motivating banks to undertake such action and here's why.
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Red ink rising
The Economist
How worrying are China's debts? They are certainly enormous. At the end of 2015 the country's total debt reached about 240% of GDP. Private debt, at 200% of GDP, is only slightly lower than it was in Japan at the onset of its lost decades, in 1991, and well above the level in America on the eve of the financial crisis of 2007-08 (see chart). Sooner or later China will have to reduce this pile of debt. History suggests that the process of deleveraging will be painful, and not just for the Chinese.
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High-yield credit defaults for commodities soar
Myles Udland - Business Insider
The biggest source of fascination and anxiety among investors to start 2016 was the high-yield bond market. The main sign that something was wrong was the blowout in credit spreads  meaning the difference between the yield in bonds with a "junk" rating and Treasury securities of the same maturity increased dramatically  leading investors to take this as a sign that something is wrong not only in financial markets but perhaps the global economy.
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New Doubts About 'Too Big to Fail' Banks Rattle Foundation of Regulations
Peter Eavis - NY Times
Governments around the world have built over the last few years a vast new system of rules that would allow banking giants to fail and shield taxpayers from bailouts. Though this new regulatory architecture is eye-numbingly complex, its builders contend that it has made the financial system much safer without having to resort to measures like forcing a breakup of the largest banks.
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I see bubbles bursting everywhere: Top academic
CNBC
Deflationary tides are lapping the shores of countries across the world and financial bubbles are set to burst everywhere, Vikram Mansharamani, a lecturer at Yale University, told CNBC on Thursday.
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SocGen: Global Deflationary Fears Just Hit an All-Time High
Luke Kawa - Bloomberg
Deflation fears are at an "extreme level," according to Société Générale's head of global asset allocation, Alain Bokobza. The French bank's proprietary inflation newsflow indicator tracks media reports on price pressures in 15 countries (a mix of developed and emerging markets more heavily weighted toward the former) to get a handle on what the average reader of news thinks about inflation.
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R3 ends "first of its kind" blockchain trial with 40 banks
Antony Peyton - Banking Technology
New York-based R3 CEV has finished its trial of five distinct blockchain technologies in parallel in the "first test of its kind".
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It's all about the end of SwapClear
William Mitting - Futures & Options World
Why the winner of the LSE bidding war will seek to kill the golden goose as quickly as possible. Yesterday's report by Phil Stafford in the FT that the LSE would consider a sell-off of Clearnet to alleviate any competition concerns over its proposed merger with Deutsche Bourse is a side show, an interesting side show but a side show nonetheless. There is no doubt that Clearnet is an important piece of infrastructure in the European derivatives market, the clearing house clears all Euronext's continental business (and would be naturally at home with the exchange group). But in terms of competition, it is insignificant in the face of LCH's swaps clearing business SwapClear. SwapClear is the reason why this bidding war will go on and on, and the jewel in the LSE's ever expanding crown.
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US life insurers shaken by rock-bottom rates
Susanne Walker Barton - Financial Times
Life insurers are supposed to be bedrocks of financial stability, dependable institutions whose long-term business models set them apart from scandal-hit banks. Yet shares in the leading US insurers, which help millions of Americans through retirement, have been anything but stable in recent weeks. Titans of the industry have been hit almost as hard as lenders in this year's stock market rout.
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Banks could learn a lot from Spider-Man
Anthony Browne - The Telegraph
With great power comes great responsibility. The spectacular comic book world of Spiderman rarely overlaps with the more prosaic one of finance - other than the web-slinger occasionally foiling a bank robbery - but his famous motto is something that banks and regulators are taking to heart.
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After 15 Years, a Bond Trade Now Pays Off
Gregory Zuckerman, Julie Wernau and Rob Copeland - WSJ
Some traders go short. Others go long. Paul Singer went really, really long. His trade, which is transfixing Wall Street this week, has been one of the most drawn-out and contentious bond-market sagas ever. But thanks to a settlement this week, Mr. Singer's nearly 15-year-old wager on Argentinian government bonds has yielded $2.4 billion, including over $100 million for lawyer fees and other considerations, a gain of roughly 10 to 15 times its original investment.
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Bill Gross: Avoid bank stocks in negative interest-rate world
Reuters
Bill Gross, the widely followed investor who runs the Janus Global Unconstrained Bond Fund, said Thursday investors should not be tempted into buying beaten-down bank stocks against a backdrop of interest rates potentially turning negative.
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| Central Banks | Negative Rates + QE = Less Liquidity in Government Bond Markets
Susanne Walker Barton - Bloomberg
Add negative interest rates to the list of monetary-policy tools hampering liquidity in sovereign-bond markets. One measure of market liquidity in Europe has fallen by more than half since late 2014, according to JPMorgan Chase & Co. The aberration may worsen as the European Central Bank contemplates pushing rates further into record-low levels. The ECB, whose quantitative easing already removed 595 billion euros ($645 billion) of public and private debt from the market, is forecast to cut its deposit rate further below zero on March 10.
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ECB Studies Stimulus Options That Won't End Up Hurting Banks
Jeff Black and Alessandro Speciale - Bloomberg
One week before a long-awaited stimulus decision, European Central Bank officials are privately deliberating over how to enhance their monetary policy stance without maiming its transmission. Committees studying how to mitigate the impact on banks have prepared potential measures that range from variations on a tiered deposit rate to techniques for countering the impact of stimulus on excess liquidity, according to people familiar with the discussions. The suggestions could still be rejected by the Executive Board or turned down at the Governing Council's March 10 meeting. An ECB spokesman declined to comment.
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Framing The Narrative Going Into The March 10th ECB Meeting
Adam Whitehead - Seeking Alpha
As the March 10th ECB monetary policy meeting approaches it is useful to draw some baselines on where the various actors are in the Eurozone's unfolding story. This provides the context for the decisions that the ECB will make. Eurogroup President Jeroen Dijsselbloem was observed to embrace the assault on the Eurozone's currency in the last report. He has placed this overt monetary inflation riddle inside the mystery of the Eurozone's banking crisis ; and wrapped them both inside the enigma of the Eurozone's debt mutualization debate. One has to admire Dijsselbloem's practical embrace of the important challenges facing the Eurozone, at the time when his country is in the chair position of the presidency. One must however be slightly more critical of his method.
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Beijing's monetary policies increase risk of property bubbles, says PBOC adviser
Bloomberg via South China Morning Post
Beijing's monetary policies have encouraged investors to pour money into real estate, inflating prices in cities such as Beijing, Shanghai and Shenzhen and increasing the risk that bubbles could form, central bank policy adviser Bai Chongen said.
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UK's record low interest rates to continue in 2016
Katie Allen - The Guardian
The UK is set for another year of record low interest rates, economists have predicted, following news that the dominant services sector suffered a sharp slowdown last month.
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Greece resists IMF demands for more pension cuts, boasts better 2015 performance
Angeliki Koutantou - Reuters
Greece cannot accept demands from the International Monetary Fund - one of its international creditors - to cut its pensions yet again in order to achieve a primary surplus target in two years, the finance minister said on Thursday.
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Central Bank digital currency: Bankable?
The Economist
Only banks are allowed to hold deposits at the Bank of England. What if that privilege were extended to others? A new speech by Ben Broadbent, deputy governor of the Bank of England, tries to spell out the economics of opening up the bank's balance-sheet.
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Time for helicopter money?
Kemal Dervis - Brookings Institution
"Out of ammo?" The Economist recently asked of monetary policymakers. Stephen Roach has called the move by major central banks - including the Bank of Japan, the European Central Bank, and the Bank of Sweden - to negative real (and, in some cases, even nominal) interest rates a "futile" effort that merely sets "the stage for the next crisis." And, at the February G-20 finance ministers meeting, Bank of England Governor Mark Carney reportedly called these policies "ultimately a zero-sum game." Have the major advanced economies' central banks - which have borne the burden of sustaining anemic post-2008 recoveries - really run out of options?
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Kaplan Says Fed Must Be Patient in Removing Policy Accommodation
Jana Randow - Bloomberg
Federal Reserve Bank of Dallas President Robert Kaplan said policy makers shouldn't rush interest-rate increases as they gauge the spillovers from weaker global growth and tighter financial conditions on the outlook for the U.S. economy.
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RBI pores over budget, worries on fiscal math
Suvashree Choudhury - Reuters
Some Reserve Bank of India (RBI) officials are worried that a populist budget could put the onus of driving growth on them but limit their ability to respond through big rate cuts this year. Finance Minister Arun Jaitley increased spending on farm and social sectors in the 2016-17 fiscal year on Monday in a boost to rural India, where most of the country's 1.3 billion people live.
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Indonesia central bank sets rules for Islamic forex
Erwida Maulia - Nikkei Asian Review
Indonesia's central bank has issued new rules authorizing shariah-compliant hedging in the country, citing the rapid growth of Islamic foreign exchange transactions and the rupiah's volatility
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| | | | Currencies | World's No. 2 Currency Trader Sees Dollar Surge as Misery Wanes
Lananh Nguyen - Bloomberg
When misery fades, the dollar rallies. That's the contention of Deutsche Bank AG, the world's second-biggest currency trader according to Euromoney magazine, which expects the greenback to resume its surge this year after slumping in February. The misery index, a measure of inflation and unemployment, fell in November to the lowest in almost six decades, underpinning the currency's outlook. The jobless rate is forecast to hold at an eight-year low Friday as the Federal Reserve weighs the path of U.S. interest rates.
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FX settlements face uphill legal battle
Euromoney Magazine
Law firms might be licking their lips at the prospect of fat FX settlements in Europe, but the ongoing European Commission investigation and lack of clarity around the UK's new regime for competition litigation make it difficult to predict their strategy - or their chances of success.
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A new chapter for currency disputes
Lee Jae-min - Korea Herald via Straits Times
It has been some time now since exchange rate became one of the touchiest trade issues. Practically speaking, few tools can be more tempting and effective than exchange rates in terms of artificially increasing export while suppressing import. Any gains from trade liberalisation and market opening would evaporate instantly with an artificial adjustment of an exchange rate.
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Rand's Wild Ride Shows Cost of Being a Currency Everyone Trades
Xola Potelwa - Bloomberg
It took just a hint of strife at South Africa's National Treasury to send the rand tumbling 3.5 percent in a day -- and one statement from the president's office to bring it right back again three days later. Already afflicted by its status as a proxy for other emerging markets' woes, now South Africa has to contend with a domestic crisis. Together these drivers have seen the rand overtake the Brazilian real as the most volatile major currency, which is deterring foreign investment. Outflows from stock and bond markets reached 37.8 billion rand ($2.4 billion) since the beginning of November, wiping out the 34.5 billion rand of inflows in the previous 10 months.
jlne.ws/1RsjCVb
Bitcoin's nightmare scenario has come to pass
Ben Popper - The Verge
Over the last year and a half a number of prominent voices in the Bitcoin community have been warning that the system needed to make fundamental changes to its core software code to avoid being overwhelmed by the continued growth of Bitcoin transactions. There was strong disagreement within the community, however, about how to solve this problem, or if the problem would ever materialize.
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No big short yet for hedge funds on Brexit
Jemima Kelly and Patrick Graham - Reuters
Hedge funds, whose speculating contributed to the pound's devaluation in 1992, have yet to make major bets on Britain leaving the European Union because few expect it to happen and most doubt a big payout from market moves around the June vote.
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Ethereum Skyrockets, Now Bigger Than All Other Altcoins Combined
Avi Mizrahi - Finance Magnates
In the past few months it seems like Ethereum is only going higher and higher every day - and today is no exception. However, what makes today's jump in the price of Ether different is that it marks significant milestones in a possible road to the top of the cryptocurrency food chain.
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The currency of Bankruptcy - the case of Nathan Tinkler
Bartier Perry - Lexology
A recent decision of the Federal Court provides a timely warning for businesses engaged in cross-border trade where debts may be expressed in a foreign currency. The take away point of the decision is that in issuing bankruptcy notices based on a judgment debt expressed in a foreign currency and allowing for payment in Australian currency, care must be taken to ensure the correct foreign exchange rate is applied. Nathan Tinkler, former director of Australian Pacific Coal, has been declared bankrupt by virtue of a Federal Court order made a number of weeks ago. Mr Tinkler's problems with solvency have been widely reported in the Australian media. The proceedings in the Federal Court, however, considered issues relating to the validity of a bankruptcy notice served on Mr Tinkler in which the judgment debt was expressed in US dollars.
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| | | | Indexes & Index Products | Putting the current market on the couch
Tom Goodwin - FTSE Russell
Nobel economist Robert Shiller recently wrote an op-ed piece in the New York Times on psychology and the market.[1] He draws on the field of narrative psychology, which suggests that popular narratives are powerful motivators. His observations are especially relevant for today's market. It has plummeted since the beginning of the year and everyone is struggling to make sense of it. I have sympathy for journalists who must come up with plausible stories for market fluctuations even when none is obvious. So as the market continues to fluctuate, we seem to get a new story every week. Could it be that these stories are as much drivers of the current market as explanations of it?
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Vanguard Group Launches Two New International Dividend ETFs
Chris Dieterich - Barron's
Vanguard Group launched a pair of new fund groups on Wednesday targeting international stocks with dividend yields. It's a rare expansion for the fund giant, which has grown mainly on the back of its low-cost, no-frills index funds. Spoiler alert: the new ones are cheap, too.
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US Dollar Index Volume on Thin 'ICE' down 12.44% in February
Steven Hatzakis - Finance Magnates
The operator of multiple exchanges and business lines under the Intercontinental Exchange Group structure, today reported February results across its main exchanges, showing year-over-year improvements, but a decline from January's volumes within some of its products lines showing mixed figures for February (compared to the previous month).
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| | | | Gold | I'm Bullish on Gold, and I Don't Even Like It
Mike Norman - TheStreet
The best-performing asset so far this year has been gold. I told you so. I said to buy it last November right after the Fed shifted course on monetary policy and started to raise rates. That happened on Dec. 16. Since then, gold has been rallying. Rate hikes, I explained, were bullish for gold, just as they were for stocks, the economy and commodities. In contrast, they were bearish for Treasuries and the dollar. Stocks have taken a tumble but are coming back and commodities are bottoming. The dollar has fallen from its highs.
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Gold prices are at their highest in more than a year with key technicals in play
Myra P. Saefong - MarketWatch
Gold futures climbed past the key $1,250-an-ounce level on Thursday, resulting in its strongest settlement in more than a year as U.S. economic might again looked vulnerable.
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Gold No Longer Glitters in Canada's Official Treasure Chest
Greg Quinn - Bloomberg
Canada is among the largest gold producers in the world, but as of last month the government valued its official holdings of the precious metal at zero. The country sold off 21,851 ounces of gold coins in February, the Finance Department said Thursday in a disclosure of its official international reserves. A footnote in the report said the government still has 77 ounces of the precious metal.
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India just stunned the gold market
Dave Forest - Business Insider
I wrote a few weeks ago about record slowdowns in gold sales across India. With buyers in the world's number-one consuming nation holding off on purchases ahead of an expected cut in import taxes from the federal government.
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Volatility Sparks Gold Rush
Seeking Alpha
Gold ETFs have seen the largest ever inflows in the last month as investors bid up the asset class in search of a haven from recent volatility. Gold consolidated its strong January performance last month with its best monthly surge in percentage terms in over four years. The stunning 10% plus returns delivered by the precious metal meant that gold was in fact the best performing asset class over the month as investors shunned all but the safest asset classes. In fact, the three most popular investments of the last month as gauged by ETF inflows have been precious metals, government bonds and low volatility equities.
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| | | | Miscellaneous | Northern Trust Buys Aurora Investment Management
Crain's Chicago Business
Chicago bank Northern Trust has reached an agreement to buy Aurora Investment Management, a hedge fund manager in Chicago owned by the French behemoth Natixis Global Asset Management.
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