First Impressions

Connecting: HKEx’s Li Said It Will Help Connect To China’s Trillions

Hong Kong Exchanges and Clearing is all about connecting. HKEx’s CEO Charles Li says his exchange is the linchpin that connects mainland China’s markets with the rest of the world.

Li, who spoke with John Lothian News editor-in-chief Jim Kharouf at the FIA Boca conference, said his exchange is about strategic positioning with China and taking advantage of the explosive growth it sees, especially with the London Metal Exchange firmly integrated into its business.

“Our job is to find a way to make that connection,” Li said, of China, “the largest pool of capital that is yet to be globally deployed.”
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IPXI Closes – March 2015
By Jim Kharouf, JLN
Even smart, innovative ideas for new markets sometimes don’t make it. Intellectual Property Exchange International (IPXI) announced last week to its employees and investors that it was shutting down the exchange aimed at bringing market-based solutions to the IP sector, John Lothian News has learned. In a company memo to staff and shareholders, Gerard Pannekoek, president and CEO of IPXI, wrote that it appeared that the “time was just not right, and the obstacles – including …

Quote of the Day

“If (Federal Reserve Chair) Janet Yellen came up and whispered in my ear what she was going to do for the next two years, it wouldn’t make any difference what we do. If we got a chance to buy a dealership at a sensible price with the right people, we’d buy it. We’d buy it in five minutes.”

Warren Buffet in the story, “Warren Buffett says if he ran Federal Reserve, he would not raise rates significantly”.

Lead Stories

Berkshire’s Buffett says Grexit ‘may not be bad’ for euro zone: CNBC
Warren Buffett, the billionaire chief executive officer and chairman of Berkshire Hathaway Inc, said Tuesday that an exit by Greece from the euro zone could be constructive for the region.

Reuters Poll: Market uncertainty tempers forecasts for equities’ gains this year
Uncertainty surrounding the timing of the U.S. Federal Reserve’s interest rate hike has tempered analysts’ forecasts for stock market gains this year, Reuters polls showed on Tuesday.
Global stocks have largely rallied since the start of the year, with several indexes at or close to record highs as more than two dozen central banks have eased monetary policy.

Here Comes a New Wave of Billion-Dollar Hedge Funds
by Katherine Burton, Simone Foxman, Bloomberg
Hedge fund investors aren’t giving up just yet. At least five new hedge fund companies are on track to start with at least $1 billion this year, according to data compiled by Bloomberg, after eight firms started with a 10-figure sum last year. The industry hasn’t seen this many mega-startups since 2005, when 13 funds raised a combined $19 billion.

Bond Traders Fear Oct. 15-Style Volatility Could Repeat
Matthew Boesler – Bloomberg
A group of U.S. Treasury market professionals sponsored by the Federal Reserve Bank of New York expressed concern that the large gyrations seen in that market on Oct. 15 could be repeated in the future, according to minutes of their meeting released Monday.

Time to find out hard way if asset management is systemic risk
Patrick Jenkins in London, FT
Effective regulatory crackdown may come too late
Scan the financial horizon of late and you might come away with two impressions. First, that the world is about to end. Last Monday, senior Federal Reserve official James Bullard spoke of the “devastating consequences” that will ensue from fast-growing asset price bubbles if the Fed fails to raise interest rates soon. The pronouncement came as 80 per cent of fund managers surveyed by CFA UK, a financial standards body, signalled worries about the inflated value of bonds.

Japan, Sticking With U.S., Says It Won’t Join China-Led Bank
NY Times
Japanese leaders indicated on Tuesday that their nation would not become a founding member of a new Chinese-led Asian development bank but instead remain loyal to the United States, which has urged its allies to refrain from joining.

Swiss Investor Calls for Big Cut in Hedge Fund Fees
One of Europe’s biggest hedge fund investors, Unigestion, is pushing hedge funds to scrap management fees in place of a bigger slice of profits as investors attempt to crack down on high charges.

Wealth Adviser: Don’t Call It a Sales Job
Wall Street brokerages are soft-selling adviser jobs these days, particularly to younger recruits. While veteran brokers knew from day one that pitching clients on products and services was at the core of what they did, the firms know that a new generation is turned off by the idea of a career in sales. So UBS UBS +0.84%, Wells Fargo WFC +1.19% and other firms are putting more emphasis on how advisers guide people toward their financial goals and less on the competitive hunt for customers and their money. “The future is about planning and not just about selling,” UBS’ David McWilliams tells Wealth Adviser at For millennials, it’s also about a stable income – so the brokerages are providing more of that in guaranteed form during the early, difficult years of building a business.

JPMorgan Rising; JPMorgan came out of the banking crisis stronger than it went in and it’s time for shares to catch-up. They could rise 30% in a year, not including the 2.9% yield.
By ANDREW BARY, Barron’s
After five years of leading JPMorgan Chase through epic regulatory struggles and legal settlements, Jamie Dimon has cemented his position as the world’s top banker. As other big banks floundered in the wake of the financial crisis, he used JPMorgan’s strong financial position to push to the fore in investment banking, credit cards, and asset management. And with some $2.6 trillion in assets, JPMorgan is the country’s largest bank.

Shenzhen leads China’s equity onslaught
Financial Times
Chinese equities conquered all during the first quarter of 2015, as domestic retail investors betting on stimulus fuelled a rally that analysts have already dubbed a new stock market bubble.
Despite slipping 1 per cent on Tuesday, the Shanghai stock market has added 16 per cent this year, outperforming all other global equity markets.

Market Volatility: The First Quarter By The Numbers
See It Market
With the first quarter nearly in the books, we have successfully logged 60 trading days so far this year and some might say that it has been a frustrating journey. The most notable thing that can be said about 2015 is that market volatility is back and may be here to stay for the foreseeable future.

Central Banks

Fed’s Fischer floats shadow bank regulation framework
A top U.S. Federal Reserve official on Monday suggested stress tests and certain capital requirements to contain the risks within the non-bank lending sector, while acknowledging there is little the central bank can do to impose such restrictions.

Fed to have ‘strong’ case for June rates lift-off -Lacker
The Federal Reserve will have a “strong” case to hike interest rates in June, a hawkish U.S. central bank official said on Tuesday, dismissing recently weak economic data as transitory and perhaps due to unseasonable weather.

Warren Buffett says if he ran Federal Reserve, he would not raise rates significantly
The Economic Times
Warren Buffett, the billionaire chief executive officer and chairman of Berkshire Hathaway Inc, said he would not raise interest rates significantly if he ran the Federal Reserve.
“I probably wouldn’t do much,” Buffett said when asked what he would do if he ran the Fed. “Things are working pretty well, and I would be worried that if I raised rates significantly with negative interest rates in Europe, I would be very worried about what that would do to the flow of funds.”

How markets are calling Fed’s bluff: Ex-Fed gov
The markets have been “absolutely spoiled by the Federal Reserve” and its accommodative monetary policy since the depths of the 2008 financial crisis, former Fed Gov. Kevin Warsh said Tuesday.
“Now, I would say the markets are exhausted. They’re exhausted that the Fed has decided there’s a new set of benchmarks,” he told CNBC’s “Squawk Box” in an interview.

What next for China’s central bank
China’s most recent effort to prop up its softening real estate market is not enough, analysts say, noting that a series of interest rate cuts from the central bank is the best remedy.


Dollar’s Strengthening Likely Isn’t Over
For most of 2015, the dollar has continued rising more rapidly than many investors and analysts expected. The WSJ Dollar Index, which measures the greenback against a basket of currencies, showed that the U.S. currency strengthened 12% against rivals in 2014, and gained another 8% this year through the first two weeks in March.

Wall St. earnings estimates may not foretell currency impact
Wall street analysts may be inadequately accounting for the dollar’s sharp rise in the first quarter, setting up a scenario in which some multinationals may miss already low consensus estimates – and their shares sell off as a result.
Equity analysts admit they have had trouble keeping up with the dollar’s rapid 9 percent rise so far this year. While companies have issued forecasts mentioning “currency headwinds,” most Wall St. analysts are not updating their estimates to reflect those rapidly moving exchange rates.

U.S. dollar increases share of central bank FX reserves -IMF
The U.S. dollar increased its share of allocated international reserves to 62.9 percent among global central banks in the fourth quarter, data from the International Monetary Fund showed on Tuesday.
The total amount of allocated foreign exchange holdings shrank by 1.6 percent to $6.085 trillion from the prior quarter. Overall foreign exchange holdings by the world’s central banks slipped 1.41 percent to $11.6 trillion.

Euro posts record quarterly drop; Wall St. ends day lower
The euro closed out the worst quarter in its 15-year history on Tuesday, slammed by monetary policy changes and worries about Greece, while U.S. stocks retreated a day after posting big gains.
But the S&P 500 and the Nasdaq registered their ninth straight quarterly gains.

JP Morgan appoints new head of global FX options
JP Morgan Chase & Co has promoted Robin Wemyss, its European head of foreign exchange options, to replace global head of foreign exchange options James Ellery, according to an internal announcement seen by Reuters.

Former Federal Agents Charged With Stealing Bitcoin During Probe; Men were members of a ‘Silk Road Task Force’ operating out of Baltimore
Two former federal agents were charged with stealing hundreds of thousands of dollars of virtual currency during an undercover investigation into an online drug market, bringing an age-old law-enforcement problem into the Internet era.

Indexes & Index Products

5 Must-Know Facts About The Dow Jones Industrial Average (INDEXDJX:.DJI)
Over the 119-year Dow Jones Industrial Average (INDEXDJX:.DJI) history, the index has become synonymous with the markets. Most investors check on the DJIA at the end of every trading day, if not more frequently.
But how much do investors really know about the index they rely on?
Other than that it contains 30 blue-chip stocks, few investors give much thought to how the DJIA came about or why it’s structured the way it is. And yet the Dow Jones Industrial Average history is key to understanding what the index is really telling us every day.

How to Profit from the Best MSCI Emerging Markets Index Countries
The MSCI Emerging Markets Index countries are off to a hot start this year.
But for investors looking to get a piece of the MSCI Emerging Markets Index, the better option is not the obvious one.
The MSCI Emerging Markets Index is a market benchmark, not an investment vehicle. To play its performance, investors go with the iShares MSCI Emerging Markets Index ETF (NYSE Arca: EEM ), a tracking ETF. Though this year it’s not doing a good job of tracking the index…

Investors Purchase High Volume of iShares MSCI Japan ETF Put Options (EWJ)
iShares MSCI Japan ETF (NYSE:EWJ) was the recipient of unusually large options trading activity on Monday. Traders acquired 11,000 put options on the stock, AnalystRatings.Net reports. This represents an increase of approximately 1,217% compared to the typical volume of 835 put options.

Russell Investments Strategists’ Outlook – Q2 2015 Update: Declining Energy Prices Amplify Divergence of Central Banks
Press Release
Russell Investments released its Strategists’ 2015 Global Outlook – Q2 Update report today, which highlights the most recent economic insights and market expectations from the firm’s global team of investment strategists.

S&P Dow Jones launches smart beta ESG index
Global Investor Magazine
S&P Dow Jones Indices has launched the DJSI Ethical Europe Low Volatility Index, combining its strength in developing both smart beta and ESG indices. The new index has been licensed to Commerzbank.


Here’s why it could get way worse for gold
Gold has gotten little love this year. With a 1.25 percent drop on Monday, the precious metal has sacrificed what little gains it had in 2015. And it could soon get even worse for bullion.

Whither The Gold Standard?
I have been writing for Forbes for a year and a half. I’ve met many great people, learned a lot, had some fun, and I believe, added to the monetary conversation. I have covered economic ideas such as what made gold money, current events such as progress in Arizona (Update: The bill has passed the Senate), and talked about how our monetary system is failing most people. More important than rising prices, is the falling interest rate as the Federal Reserve relentlessly buys bonds and gives free gains to bond speculators.

Gold prices to bottom out in 2015 after two-year slide – report
Gold prices are forecast to bottom out in 2015 after a two-year slide as the expected start of the Federal Reserve’s rate-raising cycle removes a key event risk from the market, consultancy Metals Focus said in a report on Tuesday.
Better prospects for gold sales in Asia, lower selling from Western investors, and a retreat in mine supply from record highs are likely to play into a stable market this year, it said.

Higher U.S. Rates Pose No Bar to Gold Rally for BofA, StanChart
Gold will probably advance in 2015, snapping two straight years of declines, even as the Federal Reserve raises interest rates, according to Standard Chartered Plc and Bank of America Corp.
Bullion will trade at $1,320 an ounce in the final quarter as investors bet that, after an initial increase in borrowing costs, further rises will be gradual, Standard Chartered said in a report on Monday. The metal will average $1,300 in the final three months of the year as rate increases come through at a muted pace, Bank of America analyst Michael Widmer wrote in a separate note on the same day.

Gold In Fed Vault Drops Under 6,000 Tons For The First Time, After 10th Consecutive Month Of Redemptions
Two months ago, when looking at the most recent physical gold withdrawal numbers reported by the Fed, we observed something peculiar: between the publicly reported surprise redemption by the Netherlands (122 tons) and the just as surprise redemption by the Bundesbank (85 tons), at least 207 tons of gold should have vacated the NY Fed’s gold vault.

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