First Impressions

JLN/MarketsWiki 2014 Annual Survey – Please Give us 30 Seconds of Your Time
John Lothian News
We say “annual” but, quite frankly, it has been three years since we’ve conducted one, so the last one is getting a little, shall we say, stale. Please click the link below and answer five simple questions. 30 seconds of your time once every three years? It isn’t too much to ask, right? Besides, you might win a valuable prize.
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***DA: As the newest entrant to our stable of newsletters, getting some demographic info from users of JLN Financials is of particular interest to us. We assume, but do not know for sure, if we are delivering the right content to readers. We promise anonymity.

Quote of the Day

“We’re still seeing PBoC intervention. This is beyond our expectations.”

A trader with a Beijing bank, as quoted in the FT story, “Renminbi caps biggest weekly fall in years”

Lead Stories

Bondmatch targets trading boost
Anish Puaar – Financial News
BondMatch, the alternative bond market owned by IntercontinentalExchange, has added new services to its platform to help users increase their chances of trading amid growing demand for new ways to tap into liquidity.
jlne.ws/1jFiMG8

***DA: Remember how during neighborhood games like Capture the Flag how at some point the teams would morph into “all-versus-all?” That is what is happening in the exchange and OTC space.

State Street Enters Fray as Corporate-Bond Broker
Katy Burne – WSJ.com
As Wall Street banks pull back from some corporate bond trades with clients, other large financial institutions are looking to step in.
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***DA: It is a fray, all right.

N.Y. Barclays Libor Traders Said to Face U.K. Charges
Suzi Ring – Bloomberg
Three Barclays Plc (BARC) Libor traders in New York were notified by U.K. prosecutors that they may be charged for allegedly manipulating the interest-rate benchmark, according to four people with knowledge of the situation.
jlne.ws/1obbuKi

***DA: Psst. An anonymous tip that there may be an allegation. Pass it on.

Italy’s Bumper Bond
Emese Bartha and Nick Cawley – MoneyBeat – WSJ
Who’d have thought it? Nerves over Ukraine are starting to nibble into global markets, and yet Italy–once a problem child of the euro zone and with its capital financially strained–has been positively swamped with demand for its new 10-year bond.
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***DA: Squeaky wheels get plenty of grease in the new paradigm.

Emerging bond and stock funds shed almost $5 billion
Reuters
Emerging bond and equity funds suffered outflows of almost $5 billion over the past week, bringing their combined year-to-date losses to over $37 billion, banks said on Friday, citing data from EPFR Global.
jlne.ws/1jFiOh6

Heard on the Street: Europe’s Bond Juggernaut Rolls On
WSJ.com
How low can you go? Where other markets have faltered so far this year, the euro-zone government bond market has just kept on rallying. Yields have fallen across the board, with the sharpest gains in southern Europe. Little seems able to upset the trend.
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Renminbi caps biggest weekly fall in years
Simon Rabinovitch in Shanghai – FT.com
The Chinese renminbi capped its biggest weekly fall in years with a 0.5 per cent drop on Friday as traders reported heavy intervention by the central bank to weaken the currency.
jlne.ws/1jFj13P

***DA: A heavyweight enters the competitive devaluation ring.

Asian equities suffer local difficulties
Patrick McGee in Hong Kong – FT.com
Ending two decades of deflation is a key goal of the Abenomics growth programme, but last month, the annual pace of core inflation held steady at 1.3 per cent. That is still the fastest pace in 5 years, but the lack of movement from a month before underscores the need for fiscal policy makers to move forward with the “third arrow” of reforms.
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***DA: Looks more like a third rail to me.

China falls out of love with cash
Patti Waldmeir and Simon Rabinovitch in Shanghai – FT.com
China is rapidly ditching the centuries-old habit of paying its bills with trunkloads of cash, and making the shift to virtual forms of payment faster than any other country on earth.
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***DA: Trunkloads? Why not wheelbarrows?

The Link Between Abenomics and A Depreciating Chinese Yuan
Michael J. Casey, Alen Mattich and Michael Arnold – MoneyBeat – WSJ
The first two items on our report today might seem like isolated events, but it would be a mistake to see them as such. One way to read China’s clear efforts to drive down the value of the yuan is that it is a belated effort to deal with the competitive pressure and externalized deflationary effect of the “Abenomics” policy framework in Japan, which drove down the value of the Japanese yen and put pressure on currencies throughout Asia.
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UK rates: this time will be different, for a while
Dan McCrum | FT Alphaville
The transition to a new normal monetary policy, by David Miles, Monetary Policy Committee member, click to read in full. That stable bank rate equilibrium at around 5 per cent – 3 per cent risk free and 2 per cent inflation, which also happens to be the UK average for the past 320 years – don’t expect it to return anytime soon, says Miles.
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Berlin attacks EU’s easing of austerity demands
Peter Spiegel in Frankfurt – FT.com
The German and Finnish finance ministries have issued a stinging rebuke of Brussels’ attempt to ease austerity demands on struggling eurozone countries, saying such flexibility improperly provided France and Spain with additional time to cut their budgets to meet EU deficit limits.
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Central Banks

Fed’s Yellen vows to increase board oversight in enforcement actions
Reuters
Federal Reserve Board Chair Janet Yellen on Thursday pledged to ramp up the board’s participation in major bank enforcement policy decisions, such as voting to approve critical settlement deals.
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5 Things Janet Yellen Said That Distance Her From Others’ Views
WSJ
The main takeaway from Federal Reserve Chairwoman Janet Yellen’s testimony before the Senate Banking Committee was that central bank policy is on cruise control until officials get a better read on the economy’s performance. The Fed will continue to gradually reduce its monthly bond purchases unless officials decide the economy has slowed substantially. A recent spate of bad weather in parts of the country make it hard to form a judgment now, Ms. Yellen said. Here are five other takeaways that don’t involve the weather
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***DA: Is she distancing herself from the very people who helped her rise to the chair?

Another Lesson From the Fed’s Crisis Transcripts
DAVID ZARING – NYTimes.com
The release of the transcripts of the Federal Open Market Committee meetings held in the midst of the financial crisis has suggested Fed officials care about their critics, and worry about the international economy.
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No clarity from economists on clarity of BoE’s new policy: Reuters poll
Reuters
The Bank of England’s revamped forward guidance has split economists in a Reuters poll as to whether it has improved clarity about where British interest rates are headed.
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Currencies

UBS Latest To Shy Away From Euromoney FX Poll
Chiara Albanese and Katie Martin – MoneyBeat – WSJ
….And another one bites the dust. The biggest one yet. UBS—one of the biggest banks in the currencies-dealing business (the fourth-biggest, to be precise)—has become the latest bank to tell clients it will not be chasing for votes in the annual competitive brawl that is the Euromoney FX Poll.
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***DA: Hurray for UBS. I have grown weary (and skeptical) of all these polls and awards.

China’s Shift on Yuan Exchange Fixes One Problem but Creates New Ones
Michael J. Casey – MoneyBeat – WSJ
For all the excitement over China’s moves to weaken the yuan and open it up to market forces, it’s worth noting that the slide since Jan. 1 that took it to its weakest level in five months against the dollar on Wednesday was worth all of 1.2%.
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Hryvnia: How Much More Pain?
MoneyBeat – WSJ
There’s no let-up for Ukraine’s hryvnia for obvious reasons. A widely-watched website indicates that the dollar is quoted at trading at around 11.50 against the hryvnia. That’s already a 7% slide on the day. Since Monday, the hryvnia has lost 20% of its value against the dollar.
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***DA: Herniated hryvnia – the medical term for a slipped currency.

Mt. Gox Files for Bankruptcy
NYTimes.com
Mt. Gox, the troubled exchange for the virtual currency Bitcoin, filed for bankruptcy protection on Friday and said that it might have lost 750,000 of its customers’ coins, essentially all of them, in a hacking attack.
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***DA: BTC is trading for $570 on Bitstamp as of this writing. That is $427.5 million.

The Bitcoin personality cult lives on
Izabella Kaminska | FT Alphaville
How to handle bad news, by public relations guru and propaganda expert Edward Bernays from his book Propaganda (1928)
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BitBeat: Mrs. Watanabe Didn’t Lose Her Bitcoin at Mt. Gox
MoneyBeat – WSJ
So who exactly is losing money from the Mt. Gox crisis? The collapse of Mt. Gox has been compared to a lot of things: An existential threat. Doom. A Lehman moment. There’s one big difference, though, between the Panic of 2008 and the Bitcoin Crisis of 2014: that’s the victims.
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Japan says any bitcoin regulation should be international
Reuters
Any regulation of the bitcoin crypto-currency should involve international cooperation to avoid loopholes, Japanese vice finance minister Jiro Aichi said on Thursday.
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***JM: Seems legit. We can just add this to our already broad platform of cooperative international reg…u… sorry, what? Oh. Never mind.

Indexes & Index Products

S&P 500 index closes at a record high
Steve Rothwell – Associated Press (via Philly.com)
After knocking on the door all week, the stock market logged a record on Thursday.
The Standard & Poor’s 500 index had moved above its previous all-time high on numerous occasions this week, only to fade in afternoon trading. On Thursday, the index stayed higher after getting a boost from strong earnings reported by a number of U.S. companies including the drugmaker Mylan and several retailers.
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Invesco faces regulatory investigation
Joe McGrath – Financial News
Invesco, the parent company of UK subsidiary Invesco Perpetual, has said the Financial Conduct Authority’s enforcement division is conducting a review of its compliance procedures between May 2008 and November 2012.
jlne.ws/1jFiO0y

World’s biggest gold ETF eyes 1st monthly inflow in over a year
Reuters
The world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Shares, is on track for its first monthly inflow of metal in more than a year after a run of weaker U.S. data boosted investment interest in gold.
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SEC writes to banks on ETN concerns
Yakob Peterseil – Risk.net
The US Securities and Exchange Commission (SEC) is calling on banks to revamp what they tell investors about their exchange-traded notes (ETNs) and asking them pointed questions about how they sell, lend and redeem the products, in a confidential letter sent earlier this month to participants in the $22 billion ETN industry.
jlne.ws/1jFiO0C

IFC Markets Adds Hybrid Tool For Traders to Create CFD-Like Indexes
Steven Hatzakis – Forex Magnates
IFCM Group, with regulatory hubs in several jurisdictions across its various subsidiaries, had its IFC Markets corp business line release an upgraded version to its NetTradeX platform, adding some unique features in the latest update to build 2.6.0, for the IFC Markets brand.
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Gold

Gold Fix Study Shows Signs of Decade of Bank Manipulation
Liam Vaughan – Bloomberg
The London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.
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Gold Bugs Return After Last Year’s Rout
WSJ.com
Investors are buying gold again. Gold is up 11% this year, and wagers on rising prices are at a four-month high in the futures market. This month, investors were net buyers of SPDR Gold Shares, the biggest exchange-traded fund that buys gold, for the first time since December 2012.
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***DA: Life is more fun when the gold bugs are chirping.

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