First Impressions

Scott Gordon, Rosenthal Collins Group – Seven (Slightly Unconventional) Career Tips From a Former Summer Intern

“Trying is the key. I’ve had some successes in my life and I’ve had a bunch of failures — some spectacular failures… But whichever you have, if it’s a success or a failure, they’re momentary. You can take a victory lap if you have a success or you can take a misery lap if you have a failure. But in either case it’s fleeting, it’s gone and you better get on with your life.”

Scott Gordon, CEO of Rosenthal Collins Group, has career advice that applies whether you are shoveling snow or breeding horses: start by taking a holistic look at what is going on in the industry, not just the day-to-day activities that involve you personally. If you are able to take that big picture look into account, the rest is fairly simple to implement. Once aware of the situation, be ready for anything, since careers are taxis not trains — they don’t take linear paths to their destinations. Gordon expands on his career advice in this video, perhaps most importantly reminding audiences not to obfuscate their lexicon.

Watch the video at »

Quote of the Day

“Every month they go without resolving the impasse on the budget means it’ll cost more to ultimately resolve it. This is a natural, predictable consequence if you do something called math.”

Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, in the story, “Illinois Will Delay Pension Payment Because of Cash Shortage”

Lead Stories

Corporate America’s Epic Debt Binge Leaves $119 Billion Hangover
Michelle Davis – Bloomberg
The Federal Reserve’s historically low borrowing rate isn’t benefiting corporate America like it used to.
It’s more expensive for even the most creditworthy companies to borrow or refinance even as the Fed has kept its benchmark at near-zero the last seven years. Companies have loaded up on debt. They owe more in interest than they ever have, while their ability to service what they owe, a metric called interest coverage, is at its lowest since 2009, according to data compiled by Bloomberg.

U.S. will hit debt ceiling no later than Nov. 3: Treasury’s Lew
The U.S. government will hit a legal debt limit and be unable to borrow more money no later than Nov. 3, Treasury Secretary Jack Lew said on Thursday.
In a letter to congressional leaders, Lew added that a remaining cash balance of less than $30 billion would swiftly deplete.

U.S. Has Sold Over $1 Trillion of 0%-Interest Treasury Bills
Min Zeng – WSJ
Investors are handing the federal government a lot of free money.
The pile of Treasury bills sold at an interest rate of zero since the financial crisis topped $1 trillion this summer and grew further this week, with auctions for three-month bills on Tuesday and one-month bills on Wednesday that each carried no yield.

Libor-Rigging Trial Begins for 2 Former Rabobank Traders
Randall Smith – NY Times
The first criminal trial in the United States of traders accused of manipulating a global interest rate benchmark got underway in Manhattan on Wednesday.

Blackstone Has First Loss Since 2011 as Stock Market Tumbles
Devin Banerjee and David Carey – Bloomberg
Blackstone Group LP posted its first quarterly loss since 2011 because of a stock-market slump.
The world’s largest alternative-asset manager reported a third-quarter loss of $416 million, or 35 cents a share, compared with a profit of $758 million, or 66 cents, a year earlier, according to a statement Thursday. The results, which fell short of the 30-cent per-share loss expected by 16 analysts in a Bloomberg survey, come six months after the New York-based company recorded its most profitable quarter ever.

Devotion to Fiscal Policy May Keep Ryan From Taking House Speaker’s Job
David M. Herszenhorn – NY Times
First, it was called the Roadmap for America’s Future. Later, it was the Path to Prosperity: Restoring America’s Promise. The next installment was Path to Prosperity: A Blueprint for American Renewal.
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Each one could be called the Ryan Plan, for short, or the Ryan Budget: a single-minded — Democrats would say absurdist — quest by Representative Paul D. Ryan, Republican of Wisconsin, to drastically cut federal spending and taxes, transform Medicare essentially into a voucher program, partly privatize Social Security and abolish the corporate income tax, the estate tax and the alternative minimum tax.

The last 30 years of global economic history are about to go out the window
Matt Phillips – Quartz
Over the last 30 years, a near constant flow of cash has inundated China and other emerging markets. It has lifted those economies, pulled hundreds of millions of people out of poverty, and dictated corporate expansion plans worldwide.
That wave is now ebbing.

How Bad Will It Get for American Express?
Devin Leonard and Elizabeth Dexheimer – Bloomberg
Every year, they got together. Sometimes Costco’s top executives would fly to New York to meet with Kenneth Chenault, the chairman and chief executive officer of American Express, and his team. From the card company’s perch on the 50th floor of its tower in lower Manhattan, the Costco guys peered at the views of Wall Street and the Statue of Liberty. They were used to looking over a less inspiring sea of parking lots from the windows of Costco’s three-story headquarters in suburban Issaquah, Wash., decorated with Van Gogh reproductions purchased from

Companies Eyeing Public Offerings Reckon With Inhospitable Market
Leslie Picker and Michael J. de la Merced – NY Times
One highly anticipated initial public offering came up short of expectations on Wednesday while another was delayed, illustrating how challenging the market has become for stock debutants.
Other planned offerings have been delayed or canceled outright in recent weeks. While the I.P.O. plans of the fast-growing mobile payments company Square and the sports car maker Ferrari have generated interest in the market, the troubled offerings raise questions about the reception they and others prepared to go public will receive.

Goldman bond trading hit caps bleak season for Wall Street
Ben McLannahan and Laura Noonan – Financial Times
Goldman Sachs has capped a bleak earnings season for many of the biggest US banks, unveiling a drop in bond trading that knocked third-quarter profits by almost 40 per cent.
The Wall Street bank, led by Lloyd Blankfein, said it had been wrongfooted by “challenging” conditions in emerging markets and “limited” client activity, as it missed profit estimates for the first time in four years.

CME set to unveil plan for Treasury future
Alice Attwood – Futures & Options World
The Chicago Mercantile Exchange (CME) is set to announce its highly-anticipated plans for a potential new Treasury futures contract on Sunday October 18, drawing a line under months of development and consultation with the market.

Illinois Will Delay Pension Payment Because of Cash Shortage
Elizabeth Campbell and Tim Jones – Bloomberg
Illinois will delay payments to its pension fund as a prolonged budget impasse causes a cash shortage, Comptroller Leslie Geissler Munger said.

Treasury Considers Plan to Help Puerto Rico
Michael Corkery and Mary Williams Walsh – NY Times
Officials in the Treasury Department are discussing a radical and aggressive response to the fiscal chaos engulfing Puerto Rico that could involve a broad debt exchange assisted by the federal government.

Banks put aside suspicion and explore shared database that drives bitcoin
Financial Times
At first bitcoin was viewed with suspicion by the banking industry. The currency was known more for its association with anarchist hackers, online drug sales, and disasters like Mt. Gox than for the technology underpinning it, blockchain.

Jobless Claims in U.S. Fall to Match Lowest Level Since 1973
Michelle Jamrisko – Bloomberg
The number of Americans submitting applications for jobless benefits unexpectedly declined last week to match the fewest in four decades.

Macro diversification through trade
Francesco Caselli, Miklós Koren, Milan Lisicky and Silvana Tenreyro – VOX, CEPR’s Policy Portal
An important question at the crossroads of macro-development and international economics is whether and how openness to trade affects macroeconomic volatility. A widely held view in academic and policy discussions, which can be traced back at least to Newbery and Stiglitz (1984), is that openness to international trade leads to higher GDP volatility. The origins of this view are rooted in a large class of theories of international trade predicting that openness to trade increases specialisation.

Muni-Bond Buying Falls to Decade Low as Investors Balk at Yields
Brian Chappatta – Bloomberg
The buy-and-hold strategy that dominates the municipal-bond market is lacking the buying side of that equation.
Securities dealers’ customers, including individuals and mutual funds, purchased less than $20 billion of state and local government debt in each of the last 27 trading days, according to a rolling five-day average compiled by research firm Municipal Market Analytics. That’s the lowest level of trading in at least a decade, a sign that individuals are hesitant to buy more municipal debt with benchmark interest rates close to a five-month low.

Exclusive: shock after HSBC orders staff to take 10% pay cut
Patrick Hosking – The Times
Hundreds of workers at HSBC’s investment banking division in London have had their pay cut by 10 per cent and been ordered to take two weeks of unpaid leave by the end of the year, The Times has learnt.
The bank, which is under intense pressure to reduce costs, broke the news to staff last week and instructed managers that there would be “0 per cent exceptions”.

Central Banks

Fed Doubts Grow on 2015 Rate Hike
Jon Hilsenrath and Anna Louie Sussman – WSJ
The chances of a Federal Reserve interest-rate increase in 2015 are diminishing amid new signs of anemic economic activity, a disappointing development for central bank officials who have been hoping to move this year after a prolonged period of easy-money policies.

Fed hike more problematic for global economy than before: ECB
U.S. rate hikes could have greater global repercussions than in the past and affect the euro zone more in some respects than the domestic market, European Central Bank Vice President Vitor Constancio said on Thursday.

ECB’s Nowotny Says Euro-Area Core Inflation `Clearly’ Below Goal
Jana Randow and Piotr Skolimowski – Bloomberg
European Central Bank Governing Council member Ewald Nowotny said both headline and core inflation in the euro area are “clearly” undershooting the institution’s goal, signaling that more stimulus may be needed.

China economic growth seen slowing despite policy easing
hina’s economic growth is expected to slow to 6.5 percent in 2016 from an expected 6.8 percent in 2015, even as the central bank eases policy further to ward off a sharper slowdown, a Reuters poll showed.

Panel Remarks at the Brookings Institution
William C. Dudley – Federal Reserve Bank of New York
It is a great pleasure to be here today to participate in this panel with John Taylor. I am going to take today’s topic?”Where to go next?”?to address the issue of how monetary policy should be conducted. This is an issue that is getting considerable attention among policymakers here in Washington, D.C. To put succinctly the question I wish to tackle: Is it better for policymakers to start with a formal rule as the default position, or for policymakers to have a more flexible approach that considers a broader set of factors in setting the monetary policy stance? As always, what I have to say today reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System.1


Why more ECB QE won’t kill this euro rally
Sara Sjolin – MarketWatch
All the stars are aligning for a weaker euro: Deflation is knocking on the eurozone’s door, there’s been a string of lackluster economic data and the European Central Bank is increasingly expected to launch more QE.

King Dollar Abdicates the Throne
Charlie Bilello – Pension Partners AdvisorBlog
Back in March, I wrote of the “Black Swan in Plain Sight” that was King Dollar:
“Based on Taleb’s criteria, it would seem that the Dollar’s advance over the past nine months would qualify as a Black Swan event. If King Dollar is indeed a Black Swan, though, why haven’t we seen reverberations in the U.S. equity market? Probably because it has not yet been elevated to that status among the consensus. Similar to how stocks ignored the initial decline in housing in 2006-07, the stock market is dismissing the abnormal strength in the Dollar.

Strong dollar is restraining economy, Fed’s Beige Book finds
Gregg Robb – MarketWatch
A key report about the U.S. economy released Wednesday offered a cautious take on the U.S. economy, further lending credence to speculation that the Federal Reserve will not raise interest rates this year.
The Federal Reserve’s Beige Book indicated some slowing in the economy, with two of the 12 districts – Richmond and Chicago — reporting that the pace of growth had slowed from mid-August until early October. One district, Kansas City, noted an overall slight decline in economic activity.

Loonie Traders Paying Up for Insurance Ahead of Tight Election
Ari Altstedter and Vincent Cignarella – Bloomberg
Currency traders are starting to get nervous about Canada’s election next week.
They’re paying more for options contracts that protect against currency swings expiring next week — the aftermath of Canada’s Oct. 19 vote — than for similar contracts that expire in a month, data compiled by Bloomberg show.

ITG Launches Market Compass, Augmenting FX Forecasting Capabilities
Jeff Patterson – Finance Magnates
ITG, an independent execution broker and research provider, has launched Market Compass, a mobile application based on predictive modeling techniques for traders, according to an ITG statement.

Cashless future for Sweden?
Katarina Ahlfort – KTH
Sweden is on track to becoming the world’s first cashless society, thanks to the country’s embrace of IT, as well as a crackdown on organized crime and terror, according to a study from Stockholm’s KTH Royal Institute of Technology.

Riksbank “Slowly Losing the SEK Battle”
Profit & Loss
Confidence in the Swedish krona is rising, according to the latest SEB survey of 150 Swedish corporates, financial instructions and foreign macro hedge funds. “Our survey of leading SEK trading companies and institutions has revealed an increasing confidence in the krona, with financial institutions claiming to be very positively positioned,” says Carl Hammer, currency strategist at SEB, “The Riksbank remains the SEK’s worst enemy and the ECB its greatest supporter. Most survey participants regard the SEK as undervalued and also expect further Riksbank easing. However, they think direct FX interventions are highly unlikely. The market forecasts EUR/SEK at 9.10 in H1 2016. We expect EUR/SEK below 9.00 in six months’ time.”

Indexes & Index Products

World’s Biggest Leveraged ETF Halts Orders on Liquidity Concern
Anna Kitanaka and Toshiro Hasegawa – Bloomberg
The world’s largest leveraged exchange-traded fund is getting too big for the market it was designed to track.
Nomura Asset Management Co. will halt subscription orders for its Next Funds Nikkei 225 Leveraged Index ETF and two other funds from Friday, it said in a statement on its website. The money manager, which relies on the futures market to deliver two times the daily return of Japan’s most famous stock index, said liquidity isn’t deep enough to ensure it can meet that target.
Surging inflows from individual investors have made the Nikk

A Closer Look at SPIVA India Mid-Year 2015
Utkarsh Agrawal – S&P Dow Jones Indices
The SPIVA India Scorecard reports on the performance of actively managed Indian mutual funds compared with their respective benchmark indices over one-, three-, and five-year investment horizons. With the SPIVA India Mid-Year 2015 Scorecard, we have also introduced asset-weighted fund returns and the quartile breakpoints of fund performance.

Hey Finance Twitter, You Are About to Become an ETF
Eric Balchunas – Bloomberg
A couple of exchange-traded funds are already tracking social media stocks.
But one soon could be tracking social media itself, according to a recent article in
A company called Market Prophit is currently in discussions with a variety of ETF issuers to make an ETF out of its new index called the Market Prophit Social Media Sentiment Index. This is a long/short smart beta-style index that aims to capture surgically the so-called sentiment factor on Twitter.

Coinoindex – Dow-Jones Index for Cryptocurrencies
Sarah Jenn – NewsBTC
Cryptocurrencies are very new but even in several years of existence thousands of coins have been created, some of them are already gone but some are quite stable and can be called crypto “blue-chips”. There are about 20-30 coins with a market capitalization of above 1 mil USD and significant daily trading volume. But of course Bitcoin trumps all the other cryptocurrencies in market capitalization and trading volume (currently all altcoins market cap is about 15% of the Bitcoin market capitalization).

Xetra/Börse Frankfurt: New WisdomTree Smart Beta ETF Launched On Xetra
Press Release – Mondovisione
A new exchange-listed index fund issued by WisdomTree has been tradable on Xetra and Börse Frankfurt since Thursday. WisdomTree is primarily a smart beta ETF provider, using fundamental data to weight companies in the reference index.


Gold ‘In Play’ for Comex Traders as Price Touches 200-Day Average 1st Time Since May
Adrian Ash – Gold News
Gold prices set new 16-week highs in London trade Wednesday, touching their 200-day moving average – a ‘key’ chart level according to many technical analysts – as weak Chinese inflation data were followed by news of a sharp drop in US retail sales in September.

Why Gold Has Bottomed
ANZ – Barron’s
The past few months have seen somewhat of a shift in sentiment within the gold market. Some indicators suggest that investors have become a lot less bearish on the metal. Firstly, holdings in gold exchange-traded funds have recovered. After falling by 90 tonnes in almost a straight line in July, ETF holdings reached a low of 1,509 tonnes in early August. Since then, investors have added 20 tonnes to holdings (see figure 7 on page 4). Secondly, the skew in 25 delta gold options has risen to the highest level since January, the height of the Grexit crisis. Both these indicators suggest the market’s attitude towards gold is potentially changing.

Gold scores highest settlement in four months
Myra P. Saefong and Mark DeCambre – MarketWatch
Gold futures settled higher on Thursday for a fifth straight session to score their highest settlement in about four months.


China’s White Elephants: Ghost Cities, Lonely Airports, Desolate Factories
Frank Langfitt – NPR
When you drive the new expressway to the airport in the Chinese city of Luliang, you are as likely to come across a stray dog as another vehicle. When I recently drove it, a farmer was riding in a 3-wheel flatbed truck and heading in the wrong direction. But it didn’t matter. There was no oncoming traffic.

Isis Inc: how oil fuels the jihadi terrorists
Erika Solomon, Guy Chazan and Sam Jones – FT
Jihadis’ oil operation forces even their enemies to trade with them
On the outskirts of al-Omar oilfield in eastern Syria, with warplanes flying overhead, a line of trucks stretches for 6km. Some drivers wait for a month to fill up with crude.

The Ultimate 1929 Stock Market Comparison
Michael Johnston – ETF Reference
The stock market isn’t unstoppable, but comparisons to 1929 are nonsense.

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