First Impressions

Long run: Jack Schwager talks traders, old and new

Jack Schwager’s career runs from pre-financial futures markets to author of the Markets Wizard books to an online start-up today. As the recipient of the CTA Expo’s 2015 Lifetime Achievement Award in New York in April, he spoke with Jim Kharouf, editor-in-chief of John Lothian News about what he knows about about top traders and his new venture, Fundseeder, an online platform for the next generation of market wizards.

For Schwager, top traders don’t just post profits, but have great risk management as well.

“It doesn’t have to be complicated at all,” Schwager said of risk management systems. “Most risk management can be achieved with some very, very simple rules.”
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Quote of the Day

“You are getting surprisingly large price moves on very little news, and everyone is increasingly conscious that the underlying cause is herding. These markets that trend strongly are prone to abrupt reversals almost without cause.”

Citi strategist Matt King in the story, “Central banks chase investor herd into liquidity trap.”

Lead Stories

Central banks chase investor herd into liquidity trap
John Geddie – Reuters
Investors used to thinking that vast quantities of cheap central bank money make financial assets a one-way bet have had a rude awakening in recent weeks, as that same conventional wisdom created frailties in the functioning of markets.

Grand Central: It’s Tough on the Fed, ECB Borders
Paul Hannon – Wall Street Journal
In a recent speech, the European Central Bank’s Benoît Cœuré talked about the implications for the global economy of divergences between his own institution’s monetary policy and that of the Federal Reserve.

Clearing houses are big risk, top U.S. federal researcher says
Douwe Miedema – Reuters
Clearing houses, whose role to guard financial stability was much praised after the 2007-09 crisis, now pose threats themselves, the head of the top U.S. financial research agency told Reuters on Friday.

Venezuela’s Foreign Reserves Just Slumped to Its Lowest Since 2003
Nathan Crooks – Bloomberg
Look out below: Venezuela’s foreign reserves tumbled to under $18 billion for the first time in 12 years on Wednesday.

US banks fend off threats to CLO holdings
Philip Scipio – Reuters
US banks are still struggling to make their collateralised loan obligations compliant with the Volcker Rule despite a move by the Federal Reserve late last year to give them more time to do so.

Barclays Said to Face US Fine for Breaching Libor Settlement
Greg Farrell, Gavin Finch and Tom Schoenberg – Bloomberg
Barclays Plc will probably be fined for violating a three-year-old settlement over interest-rate rigging, but U.S. prosecutors will stop short of seeking a guilty plea, which they are demanding from UBS AG, people familiar with the matter said.

Tsipras Mandate Main Barrier to Greek Deal, Scicluna Says
Agnes Lovasz and Karl Stagno Navarra – Bloomberg
Prime Minister Alexis Tsipras’s mandate from the Greek people is the biggest stumbling block to a deal with the country’s creditors to help avert a default, according to Maltese Finance Minister Edward Scicluna.

Central Banks

Why the Economy — and the Fed — Keeps Getting Knocked Off Track
Jon Hilsenrath – Wall Street Journal
The peril of a slow-growing economy is that even small disturbances can knock it off stride, a reality now bedeviling the U.S.

BOJ Kuroda Stresses Power of Monetary Bazooka
Bank of Japan Gov. Haruhiko Kuroda tried Friday to refute skepticism over the impact of his monetary easing program, saying it was as powerful as 10 interest rate cuts and was working well to reinvigorate the economy.

China central bank plays down liquidity injections for debt scheme
China’s central bank on Friday sought to cool market expectations that it might flood the banking system with cash to help commercial banks buy local government debt, amid speculation that such steps could amount to quantitative easing.

Bernanke slams Warren’s Fed lending legislation
Jacob Pramuk – CNBC
Former Federal Reserve Chairman Ben Bernanke on Friday decried recently proposed legislation that would limit the U.S. central bank’s lending authority during a financial crisis, adding to the recent criticism of the bill’s sponsor, Sen. Elizabeth Warren.

Is Korea Done With Cutting Interest Rate?
Shuli Ren – Barron’s
The Bank of Korea left its policy rate unchanged at a record low of 1.75%, in a decision expected by 16 out of 19 economists polled by Bloomberg.

Peru central bank holds key interest rate steady at 3.25 pct
Peru’s central bank held the benchmark interest rate steady at 3.25 percent for the fourth month in a row on Thursday, despite weak economic growth.


Africa feels the pinch from rising oil, weaker currencies
Karin Strohecker – Reuters
Several African countries are suffering this year from a double-whammy of higher oil prices and weakening currencies, with Ghana and parts of eastern Africa taking the hardest knock from the surge in inflation.

Ukraine and China ink $2.4 bn currency swap — RT Business
Ukraine and China have signed a currency swap agreement worth $2.4 billion, according to the National Bank of Ukraine (NBU). Ukraine expects it will relieve pressure on its currency which has lost above 40 percent against the US dollar in a year.

Russia’s First GDP Slump Since 2009 Signals Milder Recession
Anna Andrianova – Bloomberg
Russia’s economy fared better than forecast by all analysts, a sign the world’s biggest energy exporter will suffer a milder recession than six years ago as the ruble’s rebound and monetary easing shore up domestic demand.

Decoding the Enigma of Satoshi Nakamoto and the Birth of Bitcoin
Nathaniel Popper – New York Times
It is one of the great mysteries of the digital age. The hunt for Satoshi Nakamoto, the elusive creator of Bitcoin, has captivated even those who think the virtual currency is some sort of online Ponzi scheme. A legend has emerged from a jumble of facts: Someone using the name Satoshi Nakamoto released the software for Bitcoin in early 2009 and communicated with the nascent currency’s users via email — but never by phone or in person. Then, in 2011, just as the technology began to attract wider attention, the emails stopped. Suddenly, Satoshi was gone, but the stories grew larger.

Indexes & Index Products

The Mexican Stock Exchange and S&P Dow Jones Indices Announce Agreement for Index Licensing, Distribution, and Management of BMV Indices
PR Newswire
The Mexican Stock Exchange (BMV) and S&P Dow Jones Indices (S&P DJI), one of the world’s leading providers of financial market indices, today announced that they have signed an agreement to license all of the BMV indices including their flagship index, IPC (Indice de Precios y Cotizaciones) – the broadest indicator of the BMV’s overall performance. A signing ceremony was conducted at the Exchange earlier today.

A Rule of Thumb for VIX Watchers: What VIX Levels to Expect When Volatility Surges
Reid Steadman – S&P Dow Jones Indices Indexology Blog
Today, the Wall Street Journal ran an article titled “Volatility for Stocks Stays in Check.” But what caught my eye was the sub heading, “Expected wide stock-price swings fail to emerge, with no S&P 500 move of 2%, up or down, this year.” Here’s a question for you. If the market were to expect consistent 2% daily moves in the S&P 500 over the next 30 days, what approximate VIX level would we see?


Peter Schiff, more bullish than ever, sees gold headed to $5,000 an oz.
Myra P. Saefong – Market Watch
Despite a ho-hum performance year to date for gold, Peter Schiff, chief executive officer at Euro Pacific Capital, is still betting on gold’s eventual climb to $5,000 an ounce.

Virgin Atlantic air hostess arrested for smuggling gold at Delhi airport : India, News
India Today
The Directorate of Revenue Intelligence (DRI) on Friday claimed to have busted a racket of gold smugglers with the arrest of an air hostess and a stewardess of the UK-based Virgin Atlantic Airlines from the Delhi airport.

Barrick Gold Quits Project Citing Budget Constraints
Simon Casey – Bloomberg
Barrick Gold Corp., the world’s largest producer of the metal, quit a mining project in Nevada because of budgetary constraints, according to its exploration partner.

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