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

“Draghi also dismissed concerns about bond scarcity as premature. He said that the ECB was not encountering any problems so far in making the intended volume of purchases and he added that the programme was flexible enough to adapt to any problems that might emerge. But, apart from again ruling out a cut in the deposit rate as a way of raising the amount of bonds that can be purchased, he did not say which aspects of the programme could be changed in the future, if needed.”

Greg Fuzesi at JP Morgan in the story, “European bonds not scarce (yet), says Draghi”.

Lead Stories

Ben Bernanke Will Work With Citadel, a Hedge Fund, as an Adviser
By ANDREW ROSS SORKIN and ALEXANDRA STEVENSON, NY Times
For eight years, Ben S. Bernanke, the former Federal Reserve chairman, was steward of the world’s largest economy. Now he has signed on to advise one of Wall Street’s biggest hedge funds.
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America’s Most-Wanted Swiss Bankers Aren’t Hard to Find; At least 21 financial advisers in Switzerland charged with aiding American tax dodgers are at large
by Jesse Drucker, Bloomberg
With its tan marble floors and leather-clad reception desk, the staid Zurich offices of the Julius Baer Group, one of Switzerland’s largest private banks, are an unlikely place to find an alleged fugitive from American justice. And yet it’s here that I meet Fabio Frazzetto. Almost four years ago a federal grand jury in Manhattan indicted Frazzetto, a longtime client adviser for the bank, charging him with conspiring to help dozens of wealthy Americans conceal hundreds of millions of dollars from the Internal Revenue Service by using undeclared accounts, code names, and foreign relatives.
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Activist Investors Ramp Up, and Boardroom Rifts Ensue
WSJ
As activist shareholders increasingly become a fixture of corporate America, battle lines are being drawn in the boardroom.
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Four Ways Rich People Can Still Hide Their Money
Bloomberg
The Swiss bank account is no longer so secret, but there are other ways to keep assets away from prying eyes
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Big Banks’ Reserve Releases Fall to Lowest Levels in Five Years
MoneyBeat – WSJ
Almost gone – but not quite yet.
Big banks’ releases of chunks of their bad-loan reserves continued in the first quarter, but at their lowest level since the releases began five years ago. The top four national banks – J.P. Morgan Chase & Co., Wells Fargo & Co., Bank of America Corp. and Citigroup Inc. – released a total of only $795 million in reserves in the first quarter, down from $1.64 billion in the fourth quarter of 2014 and $1.88 billion a year ago.
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A ‘flash crash’ or two gives needed jolt
Ralph Atkins in London, FT
“I was flabbergasted, I could not believe it.” The veteran portfolio manager at a top US fund was this week recalling the US Treasury “flash crash” exactly six months ago, when yields in the world’s largest government debt market swung wildly in a matter of minutes.
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American-Made Junk CLOs Now Being Served in Yield-Starved Japan
Bloomberg
Bankers have a proposition for Japanese investors: Why don’t you put your money into bundles of junk-rated U.S. loans?
It’ll be a classic win-win, as the thinking goes. For Japanese institutions tired of decade after decade of paltry returns on Japanese government debt, they’ll earn higher yields; and for the riskiest U.S. companies, they’ll get access to a cheaper source of financing.
What could possibly go wrong?
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Dumb money update, Greek edition
Financial Times
Bond Vigilantes reminds us of this:
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European bonds not scarce (yet), says Draghi
Financial Times
We were too distracted by wardrobe-malfunctioning protesters to pay proper attention to what Draghi was saying.
Luckily, we’ve just gone through the meeting summary from Greg Fuzesi at JP Morgan and it seems one of the key takeaways was probably this:
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Hanging some of India’s public banks out to dry?
Financial Times
Evidence of a potentially large change in India’s banking system from Credit Suisse and Neelkanth Mishra’s India markets team:
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Goldman’s Improved Returns Come at Higher Risk
Dealbook – NY Times
Goldman Sachs is replacing one earnings problem with another.
The bank left behind years of ho-hum profit with an estimate-beating $2.75 billion in the first quarter. That equates to an annualized return on equity of 14.7 percent, which is arguably at the upper end of what a player like Goldman can expect to earn. The firm kept costs down, but trading accounted for much of the increase. That means the improved returns come at a higher risk.
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Blackstone Reports Sharp Rise in Profit
Dealbook – NY Times
Blackstone, fresh off its real estate deal with General Electric, continues to mint money in its two largest areas of focus: private equity and global real estate.
In the first quarter, Blackstone’s core profit — fees and its share of investment returns — grew by an impressive 169 percent, to $1.2 billion, the firm announced on Thursday. Over a 12-month period, core profit stands at $3.8 billion.
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Shareholder Litigation That Works
Dealbook – NY Times
A battle is brewing in Delaware over what was, until recently, a quiet corner of corporate law: stockholder appraisal rights, which allow shareholders to go to court to contest the price paid in a corporate buyout.
We have studied appraisal litigation extensively, and our research indicates that it plays a strongly beneficial role in mergers and acquisitions. Although shareholder litigation is often a pestilential bog of nuisance suits, appraisal cases stand out as something unusually valuable — a form of shareholder suit where the merits actually matter.
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FIA Releases SEF Tracker Report for February
FIA
FIA today published the latest issue of FIA SEF Tracker, a periodic report on trading activity taking place on swap execution facilities. This issue of FIA SEF Tracker includes data from February 2015 for interest rate, credit default and foreign exchange products. This issue also includes a spreadsheet containing the underlying data going back to January 2014.
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Central Banks

Economists Have Moved Back Their Fed Rate Hike Guesses in Droves
Bloomberg
Most economists now expect the Federal Reserve’s first rate hike in almost a decade to come at its late-summer meeting, in a ballroom-worthy swing from their outlook last month.
The share of economists projecting the Fed will wait until September more than doubled to 71 percent in the latest Bloomberg survey, from 32 percent last month. Team June shrank to 12 percent from 45 percent in March. The camp calling for a July rate hike fell to 5 percent from 12 percent.
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Fed has ‘tools’ for smooth rates lift-off
Sam Fleming in Washington, FT
A senior Federal Reserve official has expressed confidence that new levers being prepared by the US central bank to raise interest rates will work when needed — while acknowledging differences between senior officials over some key details.
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Fed’s Lockhart says ‘murky’ data complicates rate hike decision
Reuters
Atlanta Federal Reserve Bank president Dennis Lockhart said on Thursday the recent “murky” run of U.S. data has him leaning against a June interest rate hike, but added he is confident the economy will remain on track.
“I would lean to a little later versus a little earlier,” said Lockhart, saying that a below-par March U.S. employment report and other factors are making the economy difficult to read. He added that he expects the signs of weakness will prove transitory, but he wants more evidence to be sure.
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ECB gave no deadline for Monte Paschi to find buyer: CEO
Reuters
The European Central Bank has not set a deadline for Italian bank Monte dei Paschi di Siena to find a buyer but wants to see precise steps in this direction, the lender’s chief executive said on Thursday.
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Fed says economy continues expanding, but strong dollar a drag
Reuters
Economic activity continued to expand from mid-February through the end of March, but a strong dollar and falling oil prices were hurting the manufacturing sector, the Federal Reserve said on Wednesday.
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Currencies

Tactical Considerations of Hedging Currency Exposures
Kawaller & Company
Traders may offer valuable lessons to hedgers.
Hedgers should consider a hedging process that requires terminating losing hedges before their natural termination dates.
If an organization understands the nature of its exposures and their hedges, outcomes should be reasonably predictable.
It’s not easy to forecast foreign exchange rates. Sometimes large exchange rate moves are abruptly reversed, and sometimes, after relatively brief pauses, the trend reemerges. Moreover, prices frequently stutter and change direction in a seemingly random manner, often with non-trivial counter movements during trends that may persist for years.
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Bank of America settles currency-rigging lawsuit
Reuters
Bank of America Corp (BAC.N) has settled its portion of a U.S. antitrust lawsuit in which investors accused 12 major banks of rigging prices in the foreign exchange market.
The settlement with the second-largest U.S. bank was disclosed on Thursday by Scott & Scott, a law firm for the investors. Terms were not disclosed.
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EBS sets sights on running central system for FX fix
BY PATRICK GRAHAM, Reuters
Currency trading platform EBS has been approached by major banks to provide a computerised system removing much of the human element behind a scandal over the manipulation of currency benchmarks by lenders, a senior EBS manager said.
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Bitcoin, Blockchain and the Technology Revolution
by Jeffrey Kutler, The Futurist
As with any new product, Bitcoin’s success will unltimately be defined by market acceptance. One study, by U. jlne.ws/1awB1xb

London stakes its claim as global bitcoin hub
BY JEMIMA KELLY, Reuters)
London, center of the $5-trillion-a-day global currency market, now wants to be home to a controversial upstart – bitcoin.
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Indexes & Index Products

Don’t Rush to Buy Leveraged Exchange Traded Funds
Consumer Reports
Take a look at the funds page of the business section of your newspaper (assuming you still use a print newspaper, and it still has a business section). You’re likely to notice funds with names that include the word “Ultra” or “3X” appearing in the leaders and laggards tables. Those funds (traditional mutual funds as well as exchange-traded funds), and others like them, are known as leveraged funds. In 2015, at least 235 leveraged ETFs were available to investors.
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ProShares Regional Banking ETFs Change Index and Fund Names
Yahoo Finance UK
ProShares, a premier provider of alternative ETFs, today announced that its regional banking equity ETFs will be changing their benchmark index and fund names, effective April 16, 2015. The ETFs’ new index, S&P Regional Banks Select Industry Index, is the largest U.S. regional banking index in terms of ETF assets.
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Why dividend investors need to start paying attention to emerging markets
The Globe and Mail
Emerging markets play a vital and expanding role in the global economy. According to IMF estimates, the combined output of emerging economies is expected to account for more than half of the world’s GDP by 2019 on the basis of purchasing power, representing nearly twice its share in 1990.
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BSE’s index arm launches 19 new indices
Business Standard News
Asia Index Private Limited, the joint venture between S&P Dow Jones Indices and BSE, has launched 19 new indices. This includes the S&P BSE AllCap index, some sectoral indices as well as three separate strategy indices.
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GDP: Getting Difficult to Predict
S&P Dow Jones Indices
There has been a comparable oil price drop every five ten years that could be blamed on a demand crisis or a flood of supply – or some combination of the two. The gold:oil ratio that represents how many barrels of oil it takes to buy an ounce of gold is also telling a story about a supply driven drop. The very high gold:oil ratio now is clearly driven by the oil drop whereas gold has maintained its value. If oil prices remain low versus gold for an extended period of time, as was the case in the 1986 period, the elevated gold:oil ratio may indicate that the energy production boom (whether U.S. or Saudi Arabia) is much more responsible for oil’s price collapse than fears of global deflation, lack of demand, and recession.
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Gold

Gold Funds Compared By Efficiency, Physical Redemption And Audit Policy
Seeking Alpha
There are two kinds of gold investors. One kind believes in holding a small position in gold, usually paper gold, as an inflation hedge. The other kind believes in holding physical gold as insurance against the End Of The Monetary World As We Know It. There is obviously a gradient between these two poles, with some fringe gold investors believing gold is “holy,” catastrophe is imminent and building bunkers, AKA the extreme gold bugs. Others believe in eventual upheaval in a vague sense at some point. Still others think that’s crazy and just hold 5% because that’s what their financial advisor said is the conservative thing to do.
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China’s Gold Holdings? Mathematics and the Market
Global Research – Centre for Research on Globalization
Much speculation abounds regarding China’s gold holdings. They officially claim 1,054 tons as of April 2009. We suspected they might “re” announce their holdings again last year at this time as it was five years after their last announcement and China has a habit of “five year plans”. Alisdair Mcleod believes they have 20,000 tons or more which very well may be the case, I can easily make a case their holdings are far in excess of 10,000 tons just from the data since 2009. In the words of our newest presidential candidate, “at this point, what difference does it make?”.
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High-grade gold found near Kensington Mine
KTOO
The Kensington mine, located northwest of Juneau, recently announced the discovery of high-grade gold. It was found in a historic mining vein called Jualin near the active site.
“There’s an adage in the mining industry, you know the best place to look for a mine is near a mine,” says general manager Wayne Zigarlick.
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Government raises import tariff value on gold at $388 per 10 grams
Economic Times
NEW DELHI: The government today raised import tariff value of gold to $388 per 10 grams, taking cues from global price trends.
However, the import tariff on silver has been cut to $524 per kg.
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Why the digging has never stopped in England’s gold-rush town
The Guardian
Folkestone’s gold rush began last August, when 30 bars of bullion worth a total of £10,000 were buried in a strip of sand just inside the Kent town’s tiny harbour. The new prospectors who descended on the beach were unwitting contributors to what was billed as a “participatory artwork” – although most were perhaps more interested in a slender chance to redeem lives blighted by poverty.
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You’ll Never Afford This Beautiful Gold-on-Gold Apple Watch
TIME
Fashion titan Karl Lagerfeld sported a one-of-a-kind Apple Watch in a photo posted to Instagram on Wednesday, offering a glimpse of what only fame can buy.
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Miscellaneous

A Navy Seal, a Yacht Captain, and the Other People Billionaires Trust to Manage Their Money
by Margaret Collins, Bloomberg
Managing the life of Sergey Brin is big business. Through Bayshore Global Management, the Google Inc. co-founder has hired former bankers and philanthropy experts to help manage his $30.1 billion fortune. He’s employed a former Navy Seal and SWAT team veteran for security, and a yacht captain to handle his aquatic endeavors. A fitness coordinator, a photographer and archivist help run his life.
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Seeking an edge, short-sellers turn to behavioral analysis
Reuters
When Muddy Waters unveiled a short position on Noble Group (NOBG.SI) last week, it didn’t just scrutinize the commodity trader’s accounts. It also hired a behavioral analysis firm run by former CIA staff to analyze how Noble’s executives talked on a recent earnings call.
This type of analysis is the latest unorthodox research method used by short-sellers and independent research firms to boost the impact of reports they issue that challenge companies’ accounting methods.
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