First Impressions
Tech Surge: Nasdaq’s Lars Ottersgard on New Developments in the Technology Space
JohnLothianNews.com
Nasdaq, the world’s first electronic stock market, is almost synonymous with technology, from listings to licensing. John Lothian News spoke with Lars Ottersgard, head of market technology at Nasdaq, at FIA Boca, about what they are providing to marketplaces, brokers, and corporates, and the areas of growth he sees in the tech sector.
Watch the video »
Quote of the Day
“While markets anticipate higher credit risk due to commodity prices, the full effect may not be apparent until ratings actions are complete. A significant growth in debt of these two sectors may present an extremely high concentration of commodity exposure that would need to be mitigated.”
Rich Salditt, a Bloomberg Intelligence analyst in the story, ” Bond Buyers Brace for Fallen Angels as Rating Firms Clip Wings”.
Lead Stories
Hillary Clinton Said to Hire Former Wall Street Cop as Campaign CFO
By Phil Mattingly and Silla Brush, Bloomberg
Hillary Clinton is planning to name Gary Gensler, a former top federal financial regulator and strong advocate for strict Wall Street rules, as the chief financial officer of her campaign, according to a Democrat familiar with the decision.
jlne.ws/1GSQsy3
***** Mr. Gensler continues his quest to become U.S. Treasury Secretary.
Elizabeth Warren’s Extraordinarily Bad Idea For A Financial Transactions Tax
Tim Worstall, Forbes
It’s really quite amazing how bad public policy keeps being presented as if it’s something new, vibrant and wondrous. This does indeed apply to both sides of the aisle. Just to insist, it is is not true, always, that cutting a a tax rate leads to more revenue being collected. The idea of the Laffer Curve is that this is true at some tax rates and not at others. That’s why it’s a curve, not a straight line. And then on to today’s news: this idea that Elizabeth Warren put forward, again, in a speech today, this idea of a financial transactions tax. My apologies to those who wish to stick it to Wall Street but this is an idea that really, really, just doesn’t work. So why is it that so many people keep advancing it?
jlne.ws/1ENsbYA
Why Americans Don’t Want to Soak the Rich
NY Times
With rising income inequality in the United States, you might expect more and more people to conclude that it’s time to soak the rich. Here’s a puzzle, though: Over the last several decades, close to the opposite has happened.
Since the 1970s, middle-class incomes have been stagnant in inflation-adjusted terms, while the wealthy have done very well; inequality of wealth and income has risen.
jlne.ws/1HBgx3N
Bloomberg outage hits financial markets
Bloomberg
A two-hour outage at news and market data provider Bloomberg LP hit financial markets around the world on Friday, prompting debt sales to be postponed and exacerbating a spike in volatility in European stocks.
“We experienced a combination of hardware and software failures in the network, which caused an excessive volume of network traffic,” Bloomberg said in a statement.
jlne.ws/1b5kWPA
Germany Rebuts Lew-Bernanke Criticism of Current Account Surplus
Bloomberg
The leaders of Germany’s economy fired back at U.S. criticism of their swelling current-account surplus, arguing it reflects the strength of their companies and the weakness of the euro rather than a lack of domestic demand.
“It would be absurd to discuss whether German competitiveness should be reduced to narrow the current-account surplus,” Bundesbank President Jens Weidmann said in Washington on Friday.
jlne.ws/1aEkfMQ
Bond Buyers Brace for Fallen Angels as Rating Firms Clip Wings
Bloomberg
The long slump in commodity prices has opened the gates for the largest migration in the history of credit markets as rating companies review $160 billion of high-grade bonds that could end up as junk.
jlne.ws/1aEkxTH
Deutsche Bank Said to Seek Partial, Full Retail Bank Exit
Bloomberg
Deutsche Bank AG will probably opt to exit all or part of its consumer banking operations in a strategy revamp to be announced as soon as this month, according to a person with knowledge of the matter.
The company is still weighing a third option of making deeper cuts to both investment and consumer banking divisions, though this is the management board’s least-favored course, according to the person with knowledge of discussions, who asked not to be identified because no decision has been made.
jlne.ws/1aEkV4S
Wealth Adviser: Science Replaces Cat Tricks in Hunt for Clients
By KEVIN NOBLET, WSJ
Financial advisers take a more scientific approach to winning clients now than they used to. The old days featured some “cowboy stockbrokers who relied on chutzpah and grit to lasso clients,” recollects Norb Vonnegut. Among them was a broker who set loose his cat in posh neighborhoods, so he could connect with the rich strangers who rescued it. Another attended wealthy strangers’ funerals and paid special attention to grieving widows, sisters, and daughters. Now, “cowboys are also disappearing because of the shift from product to process sales,” Mr. Vonnegut writes on Wealth Adviser at WSJ.com. “The cycles are longer and dependent on proven expertise in clearly defined market niches. More skill. Less serendipity.”
jlne.ws/1EQe5FS
Are You Hot or Not? For Investors, It’s Hard to Tell
MoneyBeat – WSJ
For an investor, being proved right when others turn out to be wrong can build your confidence. It also should shake it.That is one lesson from the eye-catching performance of the Wasatch-Hoisington U.S. Treasury Fund. This portfolio, which holds the longest-term, riskiest Treasury debt, was up 32.6% in 2014 and has gained an average of 8.7% annually for the past decade.
jlne.ws/1HBg9lN
FINRA Board Approves Changes to Communications With the Public Rules, Trading Activity Fee
FINRA
The Financial Industry Regulatory Authority (FINRA) announced that its Board of Governors approved proposed changes to FINRA’s Communications With the Public Rules, as well as amendments to the Trading Activity Fee for firms with no customers that are engaged solely in proprietary trading activity for their own accounts.
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***** This is not a transaction tax. Repeat after me, this is not a transaction tax.
Chicago trading firms vie for top students
By Lynne Marek
For the undergraduates who competed in the UChicago Midwest Trading Competition, it wasn’t a zero-sum game. Nearly 80 students from universities throughout the U.S. descended on Hyde Park last weekend, as much for the coding combat as for networking with Chicago’s big trading firms.
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SEC Charges New York-Based Financial Advisor With Stealing $20 Million From Customers
SEC
The Securities and Exchange Commission today announced fraud charges against a New York City-based financial advisor accused of stealing at least $20 million from customers to fund his own brokerage accounts and then squandering the bulk of the money in highly unprofitable options trading.
jlne.ws/1FYyQhs
EU prepares rules for tackling failed financial firms outside banking
BY HUW JONES, Reuters
The European Union is looking at creating rules on how to deal with financial firms outside the banking industry that run into trouble, including clearing houses, insurers and asset managers, the EU’s financial services chief said on Friday.
jlne.ws/1JaLhH7
Blackstone’s Latest Results Suggest Its Model Is Finally Working
Dealbook – NY Times
It makes sense for a firm that thinks in blocks of seven to 10 years to take about eight before hitting its stride. The listed units of Blackstone, the buyout shop led by Stephen Schwarzman, finally trade noticeably above their 2007 initial public offering price. Owners of the equity, however, may yet prove more fickle than investors in Blackstone’s funds.
jlne.ws/1HBglkZ
Firm58 Seeks ‘Strategic Buyer;’ Object: Getting to ‘Next Level’
By Michael Brown, The Street
Firm58 has attracted a number of inquiries from private equity firms over the past two years.
But with its current, strong set of financial backers, the CEO of the back-office high-frequency trading technology company said he’s more interested in looking for a strategic buyer to get it to the next level.
jlne.ws/1GOYSXb
Citadel trader who lost $1 billion in 2014 resigns
Bloomberg via Crain’s Chicago Business
Derek Kaufman, global head of fixed income at Citadel LLC, is leaving the hedge fund firm after losing $1 billion last year in a variety of trades, according to a person familiar with the matter.
jlne.ws/1E8Mp0f
Cantor Fitzgerald Wealth boss Stan Gregor to exit – report
Reuters
Stan Gregor, a private banker hired almost two years ago to create a wealth management business for Wall Street trading firm Cantor Fitzgerald & Co., is leaving, according to trade publication InvestmentNews.
jlne.ws/1yAKVcV
Central Banks
How The Federal Reserve And Uncle Sam Ruined GE Capital
Forbes
GENERAL ELECTRIC’S mega-announcement that it is getting rid of most of its finance businesses is a damning indictment of both the Federal Reserve and bank regulators. Together, they have damaged the functioning of credit markets and almost paralyzed bank lending, thereby severely hampering recovery from the economic crisis of 2008 – 09. They are turning the crucial financial industry into a backwater utility that’s more concerned with pleasing power-hungry regulators who hold their very corporate lives in their hands than in providing the crucial financial and innovative products and services that have made our capital markets the envy of the world and that have been the handmaiden to past impressive U.S. economic growth.
jlne.ws/1aElbAA
G20 strikes hopeful tone, but officials fret over Greece
Reuters
The Group of 20 leading economies struck a hopeful tone on the outlook for global growth on Friday even as officials fretted that Athen’s inability to strike a deal with its lenders could upset Europe’s tentative recovery.
In a communique after a two-day meeting, G20 finance ministers and central bankers welcomed brighter economic signs in rich nations, but lamented weakness in emerging markets.
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Fed may allow banks to use muni bonds to meet liquidity rules – WSJ
Reuters
The U.S. Federal Reserve may allow big banks to use some municipal bonds to meet new liquidity rules that ensure they have enough cash during a credit crunch, the Wall Street Journal reported, citing people familiar with the matter.
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Revolving Door: Former Federal Reserve Chairman Ben Bernanke Takes Job With Hedge Fund Citadel
The Atlantic
So Ben Bernanke wants to make a buck. Who can blame him? The guy is one of the most esteemed economists of his generation. He served his country admirably; his term as chairman of the Federal Reserve was probably the single most stressful term in that role in history. He resigned from his tenured professorship at Princeton when he joined the Fed board. What else is the guy going to do?
jlne.ws/1aEldZs
Transient Effects, Inflation, and the Federal Reserve
www.nasdaq.com
According to Merriam-Webster, something “transient” lasts only a short time. The Federal Reserve’s statements since January 2012 have implied that the dynamics causing the low inflation / deflation were transient in nature – and medium or long term outlook was at their 2% target. Is over 3 years of low inflation a transient and short term dynamic?
jlne.ws/1aEllYQ
European central banks urge ditching Greek assets, as default fears mount
rt.com
Some European central banks have reportedly called on Greek bank subsidiaries operating in their jurisdiction to cut their exposure to Greek assets to avoid fallout should the country go into default.
jlne.ws/1HBjX6A
Currencies
Guest post: The Euro and the IMF Now
Financial Times
Wolfgang Schäuble and Yanis Varoufakis, respectively Ministers of Finance of Germany and Greece, gave back-to-back presentations at the Brookings Institution in DC yesterday, in the wings of the current IMF Spring Meetings. They were hosted by David Wessel and Kermal Dervis, two scions of the international economics profession. The two events were telling.
jlne.ws/1aEjWBF
G-20 Says Volatile Currencies Pose Risk After Dollar Surges
Bloomberg
Global finance chiefs identified volatile currencies as a threat to an improving world economy, signaling for the first time that they may be concerned by a surging U.S. dollar.
“There are important challenges including volatility in exchange rates,” central bankers and finance ministers from the Group of 20 said in a statement after talks in Washington on Friday. Countries can use capital controls “as appropriate” to deal with large and volatile flows in cross-border funds, according to the statement.
jlne.ws/1aEkpnd
Hedging your bets: How currency fluctuations affect your portfolio
Financial Post
Canadian investors who have ventured further into international waters of late should be feeling pretty comfortable about their decision.
The S&P/TSX composite index has lagged many of its global counterparts over the past few years and its relative performance doesn’t look like it’s going to improve anytime soon with the country’s economy back on shaky ground.
jlne.ws/1HBkd5M
Bitcoin as a deflationary currency: truth or myth?
BitPost
Bitcoin is represented in the public and media as a deflationary currency. What does that mean?
Some people state, that eventually Bitcoin is going to collapse because of a runaway deflation. This economic argument is known as “deflationary spiral”, which occurs with deflationary currencies.
jlne.ws/1HBkmpB
Indexes & Index Products
Intel Slump Shows How Important ETF Recipes Are to Return
Bloomberg
This year’s slump in shares of Intel Corp. and a few other big chipmakers is highlighting how exchange traded funds tracking the same industry can have vastly different returns depending on the formula used to create them.
The iShares PHLX Semiconductor ETF is based on the Philadelphia Semiconductor Index that is weighted by companies’ market capitalization, so Intel makes up 8 percent of it. The ETF has risen 2.7 percent since the start of the year, as this chart shows. Intel accounts for less than 2.7 percent of the SPDR S&P Semiconductor ETF, which tracks an equal-weighted index covering the same industry and has surged 12 percent.
jlne.ws/1aEl3kN
State Street Adds U.S. Quality Mix ETF
ETF Trends
The new ETF tracks the equally-weighted MSCI USA Quality Mix A-Series Index, which is a combination of the MSCI USA Value Weighted, MSCI USA Minimum Volatility and MSCI USA Quality Indexes. As of Feb. 27, the index was home to 631 large- and mid-cap companies, according to a statement issued by SSgA.
jlne.ws/1IlLBCJ
Active Share: Not Necessary, and Definitely Not Sufficient
Indexology: S&P Dow Jones Indices
The concept of active share was introduced several years ago as a measure of the degree to which a portfolio of stocks differs from its benchmark. One of the intriguing results of the initial research on active share was that high active share managers seemed more likely to outperform than low active share managers. This led, predictably enough, to a widespread belief that if active management wasn’t “working,” the solution was to be more aggressive, or as it was often expressed, to invest with more conviction.
jlne.ws/1IlMmvC
BSE, S&P launches AllCap index for Indian mkts
The Echo of India
To put in place an overall gauge for the Indian stock market, a new S&P BSE Allcap Index was launched today which will cover over 700 listed stocks representing over 95 per cent of market capitalisation.
jlne.ws/1IlLWFw
How Canadian fund managers performed vs. the index in 2014
The Globe and Mail
Canadian equity indexes ended 2014 on a positive note. As of Dec. 31, 2014, the headline Canadian equities indexes, the S&P/TSX composite and the S&P/TSX 60, continued their winning streak from the previous year and registered gains of 10.55 per cent and 12.27 per cent, respectively. Rising markets proved to be difficult for active managers to overcome, as the majority of Canadian active managers saw their returns lag behind the benchmark, with just 26.47 per cent of Canadian Equity Funds outperforming the S&P/TSX composite.
jlne.ws/1IlM47W
Gold
Barrick Gold’s board faces backlash over executive pay at AGM
Reuters
Barrick Gold Corp faces a fresh backlash over executive pay at its shareholder meeting this month, with some big institutions planning to vote against its compensation plan and withhold votes for directors to express their unhappiness.
Two major Canadian pension funds, the British Columbia Investment Management Corp (BCIMC) and Ontario Teachers’ Pension Plan Board, said on Friday that they plan to withhold support for the entire board in light of their concerns with Barrick’s executive compensation package.
jlne.ws/1aEjAuI
Gold Reserve targets Venezuela assets as arbitration spat heats up
Reuters
Gold Reserve Inc, a small Canadian miner that lost its crown jewel in a 2009 expropriation, is targeting Venezuelan assets as it seeks to collect a $750 million arbitration award that would put new strains on the cash-strapped government’s finances.
With higher-profile cases including Exxon and ConocoPhillips mired in delays, a technicality in Gold Reserve’s case filing has allowed it to aggressively seek out new jurisdictions to execute its award.
jlne.ws/1aEmiAz
Gold imports spike nearly 94%, touches $4.98 billion in March
timesofindia.indiatimes.com
Gold imports surged by 93.86 per cent year-on-year to $4.98 billion in March due to declining prices and easing of restrictions by the RBI.
jlne.ws/1HBkYeY
What Is Really Driving Gold?
www.smarteranalyst.com
If anything, gold bulls are continuously looking to confirm their bullish outlook. Most precious metals websites are filled with stories, news and developments from the gold market, accompanied by the implication that they will drive the gold price up. Examples of this include gold coin sales, Shanghai gold withdrawals, central bank buying volumes, evidence of market manipulation, money printing volumes, velocity of money, etc.
jlne.ws/1aEmNuq
Oregon gold miners in BLM dispute call on armed supporters to stand down
OregonLive.com
A man who owns a gold-mining claim on federal land in southwestern Oregon asked for help defending it after U.S. authorities ordered him to stop work, but he is now telling his armed supporters to back off.
Rick Barclay said Thursday that he hoped to prevent his fight with federal regulators from turning into the kind of high-profile standoff at a Nevada ranch last year.
jlne.ws/1aEmvnf
Bill would let Texans pay with gold, silver pieces
Dallas Morning News
It’s not about the Benjamins but the bullion for one Tarrant County lawmaker.
Texans would be able to pay with gold and silver pieces minted by the federal government as legal tender under a bill offered by Sen. Konni Burton, R-Colleyville.
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READ MORE: JLN Financials: Hillary Clinton Said to Hire Former Wall Street Cop as Campaign CFO; Elizabeth Warren’s Extraordinarily Bad Idea For A Financial Transactions Tax; Why Americans Don’t Want to Soak the Rich.