First Impressions

Simon Puleston Jones, CEO of FIA Europe – In Pursuit of Happiness
JohnLothianNews.com

“Try to find someone who does things right that you really aspire to be over the course of your career.”

Simon Puleston Jones, CEO of FIA Europe, gives advice for balancing personal life with career life. Jones begins his presentation with an acronym for “DREAM”, discussing how happiness and achieving your goals is related to Diligence and drive, Relationships and recruitment, Education and ethics, Adjustments and appreciation, and Mistakes and mentors. He stresses that your career should be something you truly enjoying waking up for and how some perks such as fancy cars and large boats can be outweighed by having a family and raising children. Jones shows that happiness is not about materialistic possessions, but rather the relationships you build with others and the experiences you have throughout your life.

Watch the video »

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Kilting for Quid; Kilting for Kids
Doug Ashburn – JLN

You may be asking why we are rerunning the above video from last fall’s MarketsWiki Education event in London. The answer is twofold. First, Simon Puleston-Jones delivered one of the best talks we ever had the pleasure of publishing, and one well worth repeating. Second, we want to give a glimpse of the guy who will be donning a kilt at this year’s IDX Gala Kilt Challenge.

You may recall that at last year’s IDX dinner, FIA CEO Walt Lukken put on the kilt for Futures for Kids, and helped the organization reach a milestone – £2 million raised for the charity since its inception. He then passed the magic sporran to Mr. Puleston-Jones, who on June 10, 2015, will take his place among such illustrious Kilt Challenge alumni as Clive Furness, Simon Rostron, Jeremy Grant and, of course, our own John Lothian, who did the honor in 2011.

Though Simon has just passed the halfway point in his quest to raise £5,000 by the 10th, there is still a long way to go. And consider the sacrifice:

“My Welsh ancestors may well turn in their grave to see a son of Wales wearing a Scottish kilt,” says Puleston-Jones, “but it’s well worth their ire as I strive to reach the goal.”

Regular readers of the John Lothian Newsletter know how much FFK does for a host of children’s charities across the globe including, most recently for the victims of the Nepal earthquake. Please check out the FFK site, and give generously, in the hope that today’s children may participate in the DREAM that Simon Puleston-Jones speaks about so eloquently in his video.

Click here to learn more about Futures for Kids

Click here to donate via Simon’s JustGiving page

Quote of the Day

“The markets across Europe are pretty tight in terms of vacancy rates and lenders are so risk averse in terms of speculative office development that a bank would have to do a pre-let (commit to rent a property before it has been built), or buy a site.”

Mat Oakley, head of commercial research at global real estate consultancy Savills in the story, “British-based banks planning for EU “no” stymied by lack of European office space”.

Lead Stories

Bond Traders Uncover Secret to Rates That Fed Just Doesn’t Get
by Daniel Kruger, Bloomberg
Forget 2015. The real play for bond traders is 2016.
For years, the $12.6 trillion U.S. Treasury market has signaled — correctly — that the Federal Reserve was too optimistic in its outlook for the economy and interest rates.
jlne.ws/1duwM7U

Goldman: How ‘Grand Theft Auto’ Explains One of the Biggest Mysteries of the U.S. Economy
Bloomberg
U.S. productivity growth has been surprisingly sluggish in recent years, prompting economists to embark on a lengthy quest to explain the decline and its role in stubbornly low inflation and GDP growth.
Measured productivity growth has averaged 1.5 percent over the past decade —far below the long-term average of 2.25 percent. While some of that decline can be attributed to the aftermath of the 2008 financial crash and ensuing recession, there’s a longer-term trend at play here too.
jlne.ws/1SARBhU

‘Big Short’ Recreates Lehman Bros. Offices in Regulator’s Building
MoneyBeat – WSJ
New York’s top banking regulator, Benjamin Lawsky, walked into the office of Lehman Bros. Friday morning almost seven years too late. Well, not really.
jlne.ws/1BmWLmR

The world is drowning in debt, warns Goldman Sachs; Ageing populations mean countries’ debt piles risk growing out of control, warns European head of Goldman Sachs Asset Management
By Szu Ping Chan, The Telegraph
The world is sinking under too much debt and an ageing global population means countries’ debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned.
jlne.ws/1J208Wr

Most buy-siders feeling bond liquidity pinch
The Trade News
Almost three quarters of buy-siders say dealer risk appetite is having a negative impact on their ability to source corporate bond liquidity, according to research by Woodbine Associates. The research adds weight to speculation that investors are struggling with fixed income liquidity, but also suggests that some of the potential solutions are not effective enough.
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British-based banks planning for EU “no” stymied by lack of European office space
Reuters
A shortage of prime office space in rival European financial centres may torpedo plans by some of London’s banks to quit the UK capital if Britain opts out of European Union membership. Prime Minister David Cameron has promised to renegotiate Britain’s relationship with the EU and then hold a vote by the end of 2017 on whether to stay in the bloc or leave. But decamping from their expansive London homes to Frankfurt, Paris or Dublin would be no simple task.
jlne.ws/1BmV7Br

China brokers’ capital rush fuels margin-fed rally
FT.com
China’s brokers have raised more capital this year than in the past three combined — and more than half the $14bn proceeds are being ploughed straight back into financing the equity boom that enabled them to tap the markets in the first place.
jlne.ws/1J22jcz

Shenzhen Stock Market Charts
Bloomberg
While markets in the U.S. and much of Europe were closed for a long weekend, stocks in China continued to rally.
The Shenzhen Composite Index is now up over 100 percent year to date.
jlne.ws/1SARwL6

Deutsche Bank to Pay $55 Million to Settle Derivatives Inquiry
Dealbook – NY Times
Deutsche Bank “overstated” the value of a multibillion-dollar portfolio of sophisticated derivatives during the height of the financial crisis, leading it to file inaccurate financial statements for at least a six-month stretch, securities regulators in the United States said on Tuesday.
jlne.ws/1SAQONV

?US Senator Warren calls for hearings into bank waivers
Gina Chon in Washington, FT
US Senator Elizabeth Warren and other lawmakers are calling for public hearings on whether banks accused of rigging foreign exchange markets should be allowed to manage retirement accounts.
jlne.ws/1dutpOc

Ex-Trader Called ‘Ringmaster’ at Libor-Rigging Trial
Dealbook – NY Times
Tom Hayes, a 35-year-old former trader for Citigroup and UBS, was the “ringmaster” in a concerted effort to manipulate global benchmark interest rates to make as much money as he could, prosecutors said on Tuesday in a London court.
“It was that greed that led to his dishonesty on an enormous scale,” Mukul Chawla, the prosecutor, told the jury.
jlne.ws/1SAR7YU

More Swiss banks to settle with U.S. DoJ in near future: official
Reuters
More Swiss banks are expected to settle with the U.S. Department of Justice “in the near future” to avoid prosecution on charges of helping U.S. account holders hide their assets from the tax authorities, a senior Swiss finance ministry official said on Tuesday.
jlne.ws/1SARmTZ

Goldman’s New Cop Is FBI Agent Who Put Away Madoff, Rajaratnam
by Patricia Hurtado, Bloomberg
The FBI agent who oversaw the Bernard Madoff investigation and helped pioneer the use of wiretaps that yielded dozens of insider-trading convictions is now working for Goldman Sachs Group Inc.
jlne.ws/1cXBpq5

Central Banks

Jury Is Still Out on European Central Bank’s Stimulus Program
NY Times
By some measures, the European Central Bank is confounding the naysayers.
When the eurozone’s central bank started its stimulus program in March, critics warned that its planned monthly infusions of 60 billion freshly minted euros would not be enough to jolt the Continent’s economy back to life.
jlne.ws/1SAR1AK

Fed rate hikes may trigger global volatility: Fischer
Reuters
When the Federal Reserve raises U.S. interest rates for the first time in nearly a decade, it should weigh the effects on global economies and can expect some bouts of financial market volatility, a top Fed official said on Tuesday.
jlne.ws/1SARiU9

Regulation should be main tool against bubbles: Fed’s Mester
Reuters
Central bankers should be aware of the potentially destabilizing effects of super-easy policy on financial systems, a top U.S. Federal Reserve official said on Monday, even if monetary policy should not be used as a main tool to prevent bubbles.
jlne.ws/1J1XP5K

ECB error spurs questions about policy disclosures
MarketWatch
A European Central Bank snafu last week that meant one of its officials gave market-moving information to a private audience including major hedge funds hours before it was made public is raising broader concerns about European policy makers’ behind-closed-doors meetings.
jlne.ws/1BmVdch

Currencies

Venezuela to block currency information
Linette Lopez – Business Insider
Some ruling party politicians in Venezuela will stop at nothing to hide the jaw dropping fall of the country’s currency, the bolivar, against the dollar, and that could mean taking on companies like Google and Firefox.
One legislator, Juan Carlos Alemán, said on Monday that the country’s Ministry of Science, Technology, and Innovation is working on a way to make it impossible for Venezuelans to check the black market value of the bolivar, which has declined 30% in the last month.
jlne.ws/1BnMBSW

The Dollar is Hitting an Eight-Year High Against the Yen
Bloomberg
The U.S. dollar is making a big move higher, strengthening against all 16 major currencies on Tuesday.
Earlier the dollar hit a near eight-year high against the Japanese yen, which some are attributing to U.S. economic data that surprised to the upside and continued tensions in Greece.
Others are calling it more of a technical move. Here’s what Bespoke Investment Group said in a morning note.
jlne.ws/1SARD9l

NY regulator raises spectre of further forex penalties for banks
FT.com
Wall Street banks risk new penalties over their rigging of foreign exchange markets, as New York’s banking regulator intensifies a probe into computer-driven currency trading.
jlne.ws/1J22J2I

Electronic FX Market Update, 2015: The Race Tightens Up
Aite Group
E-FX market fragmentation will remain as exchanges take greater interest in OTC FX and banks relinquish their market-making role.
jlne.ws/1Evleq1

Indexes & Index Products

Is the index that performs better really the better Index?
ETF Trends
What makes a great index? A typical response might be “performance” – particularly with reference to smart beta indexes which may offer the potential for enhanced index returns over traditional market capitalization indexes.
jlne.ws/1J24BZh

Under New Management: Alan Campbell Looks To Expand Interest In Bloomberg Commodity Index
Jim Kharouf – JLN
Sometimes you just need a change of scenery.
The Bloomberg Commodity Index, or BCOM, was taken on by Bloomberg in a partnership with UBS last July and now has several months as its new administrator.
jlne.ws/1HsZDFZ

**In case you missed this story from last week.

Half-year Review of EuronextiVigeo CSR Indices
Euronext, the primary exchange in the Euro zone, and Vigeo have completed their half-year review of the Euronext-Vigeo index range. The Euronext-Vigeo index range is composed of seven indices – Euronext-Vigeo France 20, Euronext-Vigeo UK 20, Euronext-Vigeo Benelux 20, Euronext-Vigeo US 50, Euronext-Vigeo Eurozone 120, Euronext-Vigeo Europe 120 and Euronext-Vigeo World 120. Index components are reviewed and updated twice a year, in June and in December. Decisions made today will take effect in the trading session starting Monday, 1 June 2015. The May 2015 update of the Euronext-Vigeo index range includes 42 new component companies selected from a field of over 2,000. A total of 30 companies were removed from the range.
jlne.ws/1Evjs89

Home Prices in 20 U.S. Cities Increased 5% in Year to March
Bloomberg Business
The S&P/Case-Shiller index of property values increased 5 percent from March 2014 for a second month, the group said Tuesday in New York. The median estimate of 25 economists surveyed by Bloomberg called for a 4.6 percent year-over-year advance. Nationally, prices rose 4.1 percent from March 2014.
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FTSE Russell unveils transitional indexes that include China A shares
Yahoo Finance UK
FTSE Russell, one of the world’s largest index providers, said it will launch two transitional indexes that include China A shares, paving the way for local Chinese shares to be included in its emerging markets benchmark in two to three years.
jlne.ws/1J23QPW

Russell Rebalancing May Give Markets a Kick This Summer
MoneyBeat – WSJ
With more than $4.4 trillion invested in products linked to various Russell indexes, their rebalancing is “the biggest trade of the year,” and touches more than 95% of the U.S. stock market by capitalization, says Nicholas Colas, chief market strategist at New York brokerage Convergex.
jlne.ws/1J24xJ3

Newly Launched STOXX International Exposure Indices Licensed To Source
STOXX
STOXX Limited, a leading provider of innovative, tradable and global index concepts, today announced the launch of the STOXX International Exposure Indices. The new indices provide exposure to companies that generate a substantial portion of their revenue outside their home region, allowing market participants to express views on those companies that are well positioned to profit from currency depreciation and higher growth in non-domestic markets. The EURO STOXX International Exposure and STOXX Japan International Exposure indices have been licensed to Source, one of Europe’s largest issuers of ETFs, and the initial fund launches are expected in June 2015.
(No Link)

FTSE Includes China Shares in Transitional Emerging Indexes
by Kyoungwha Kim, Lisa Pham, Kana Nishizawa, Bloomberg
FTSE Group will include China’s stocks in two new emerging-market indexes, laying the groundwork to include the world’s best-performing equities in benchmarks tracked by international money managers.
jlne.ws/1F81mdf

Gold

Russia boosting gold holdings as defence against ‘political risks’ – c.bank
Reuters
Russia is increasing its gold holdings because gold is a reserve asset that is free from legal and political risks, a senior central banker said on Tuesday.
The comments by Dmitry Tulin, who manages monetary policy at the central bank, reflect Russian fears that the country’s overseas assets could be frozen as part of a possible toughening of Western sanctions over the Ukraine crisis.
“As you know we are increasing our gold holdings, although this comes with market risks,” Tulin told lawmakers in the lower house of parliament.
jlne.ws/1F97OAw

India seeks to tap into vast private gold hoards
Amy Kazmin in New Delhi and David Keohane in Mumbai
The Financial Times
India’s policy makers have long sought to curb their citizens’ rapacious appetite for imported gold — tonnes of which are believed to be stashed away under mattresses, in cupboards and in the hidden vaults of Hindu temples.
But after the failure of gold import bans, restrictions and high tariffs, Prime Minister Narendra Modi’s administration is trying a new tack to reduce India’s hunger for imported gold.
jlne.ws/1F9896v

Australia’s gold miners drive M&A revival
James Regan, Reuters
May 26 Gold miners are spearheading a wave of merger and acquisition activity in Australia, riding a rebound in local gold prices to pounce on projects promising quick growth.
In the first signs of life since the country’s mining boom went bust three years ago, companies are buying assets from international rivals tightening their belts, and partnering with fellow Australian miners.
“Everyone is looking for assets that enable them to grow. We’ve seen more M&A in Australia in 2015 than in the past five years,” Ian Murray, chairman of Perth-based Gold Road Resources Ltd told Reuters, referring broadly to the level of interest in the sector.
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