First Impressions

The Data Game: UnaVista’s Maryse Gordon Dissects the Data Challenges under Global Regulations
Chief among the post-financial crisis mandates is the building of a robust and standardized system of global data distribution and storage, but the task has proven to be more difficult than expected. Maryse Gordon of UnaVista, London Stock Exchange Group’s trade repository and approved reporting mechanism, outlines the challenges and solutions for data matching, validation reconciliation and reporting across multiple jurisdictions.

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Quote of the Day

“There’s a Goldilocks zone, a moderate temporal distance, in which it’s possible to cultivate probabilistic foresight.”

Philip Tetlock, co-author of “Superforecasting: The Art & Science of Prediction,” in the story, “What the Superforecasters Say About When the Fed Will Lift Rates”

Lead Stories

Fed Keeps Interest Rates Near Zero, but Says Economic Indicators Remain Strong
Binyamin Appelbaum – NY Times
The Federal Reserve announced Wednesday that it is not ready to raise interest rates, completing a seventh year in which it has held short-term rates near zero.

Sensible Pricing Comes to High-Risk Debt Securities
William D. Cohan – NY Times
For the first time since the onset of the 2008 financial crisis — and the Federal Reserve’s response, which was to drive down the cost of money to near zero — some rational pricing seems finally to be seeping into the market for the riskiest debt securities. This correction in the price of bonds is good news for investors, for markets generally and for the rest of us who hope not to suffer another deleterious credit collapse fueled by fee-seeking underwriters and speculators on Wall Street.

Citigroup passes European inflation swap first
Luke Jeffs – Futures & Options World
Citigroup said it has cleared the first inflation swap for a continental European buy-side client, marking a milestone in the evolution of the product as it moves from the over-the-counter market to a cleared model.
Citigroup said on Wednesday it centrally cleared the inflation swap on behalf of Robeco, the European asset management firm.
The swap was cleared through LCH.Clearnet’s SwapClear which became in April the first European clearing house to offer inflation swap clearing, as reported by

Who is Jes Staley? Barclay’s new chief executive profiled
Tim Wallace – The Telegraph
When Jes Staley emerged as the front runner to replace Antony Jenkins as Barclays’ chief executive, alarm bells immediately began to ring.

JPMorgan Chase and Silicon Valley are battling it out—over you
Ian Kar – Quartz
“Silicon Valley is coming.” That’s the warning JPMorgan Chase CEO Jamie Dimon issued in his letter to shareholders (pdf) this year, and it no doubt was a big motivation behind the development of Chase Pay, the Apple Pay competitor that Chase unveiled this week.
The ongoing battle for digital-payment supremacy is mainly between banks and big tech companies, but it’s really all about you, the consumer. Both sides are fighting to control the customer relationship involved when you purchase things.

Help Not Wanted: Investment Banks Turn Cool on Hiring in Asia
Julie Steinberg – WSJ
Coming off a flush first half of the year on the back of booming China deals and trading, investment banks in Asia were in a strong position to step up hiring.
But with China’s market volatility leading to a weak third quarter and new regulatory requirements posing continual headwinds, Wall Street’s hiring plans in Asia have been scaled back. Some banks are expecting to keep headcount levels steady over the next several quarters, while at least one, Standard Chartered PLC, is shaking up its operations with hundreds of Asian job cuts to take place in coming months.

Cinnober wants partners to help tap investment banks
Alice Attwood – Futures & Options World
Tech firm Cinnober wants strategic partners to support its plan to work more closely with investment banks as it nears completion of technology upgrades targeted at the sell-side.
Veronica Augustsson, chief executive of Cinnober, told FOW investment banks remain a key focus and the Swedish firm is looking for partners to help it to break into that sector.

Singapore, World Bank establish Infrastructure, Urban Development Hub
The World Bank Group (WBG) will be expanding its Singapore office to create its first Infrastructure and Urban Development Hub, said WBG and Singapore’s Ministry of Finance (MOF) in a joint press release on Tuesday.

UniCredit CEO fights to keep investor confidence with new plan
Sinead Cruise and Silvia Aloisi – Reuters
As UniCredit puts the finishing touches to an updated strategic plan to be presented to shareholders next month, some investors in the top Italian bank are raising questions about the leadership of Chief Executive Federico Ghizzoni.

Goldman to pay $50 mln for not supervising banker in NY Fed case-NYDFS
Suzanne Barlyn – Reuters
Goldman Sachs Group Inc will pay a $50 million fine for a banker who took confidential documents from the Federal Reserve Bank of New York and shared them with a client, the New York Department of Financial Services said on Wednesday.

How the U.S. Should Fix Puerto Rico
Greg Ip – WSJ
Puerto Rico is to the United States as Greece is to the eurozone: a heavily indebted, mismanaged economy locked in a monetary union with a much richer neighbor.
Puerto Rico is now retracing the path Greece took five years earlier. The U.S. commonwealth defaulted on some debt in August and could run out of cash by November, forcing it to slash jobs, pensions and other social payments.

Britain is heading for another 2008 crash: here’s why
David Graeber – The Guardian
British public life has always been riddled with taboos, and nowhere is this more true than in the realm of economics. You can say anything you like about sex nowadays, but the moment the topic turns to fiscal policy, there are endless things that everyone knows, that are even written up in textbooks and scholarly articles, but no one is supposed to talk about in public. It’s a real problem. Because of these taboos, it’s impossible to talk about the real reasons for the 2008 crash, and this makes it almost certain something like it will happen again.

Central Banks

The Fed’s Big December Rates Problem
Justin Lahart – WSJ
The Federal Reserve may worry that if it doesn’t raise rates this year it will send the wrong signal to markets. Not that it can do much about that.

Puppet or muppet? The Yellen Put and the Fed’s market control
James Mackintosh – Financial Times
Janet Yellen is supposed to be the puppet master for the US economy, and is widely thought to pull the strings for the rest of the world too. As chair of the Federal Reserve she is charged with finding consensus among policymakers and so setting US interest rates, the price of money for the world’s most important reserve currency.

Kuroda’s Stimulus Toolkit: Here Are Options for Bank of Japan
Jodi Schneider and Toru Fujioka – Bloomberg
With expectations building that the Bank of Japan may further boost stimulus to keep its reflation program on track, here are some of the obvious — and not so obvious — choices available to Governor Haruhiko Kuroda.

What the Superforecasters Say About When the Fed Will Lift Rates
Tom Redmond – Bloomberg
You’ve asked everyone else about when the Federal Reserve will move on interest rates. Now try someone with a shot at getting it right.

Why Fed may hike rates before seeing whites of inflation’s eyes
Jason Lange – Reuters
Further falls in America’s jobless rate will lead inflation to start rising early next year, according to a forecast based on research Federal Reserve Chair Janet Yellen has cited as shaping her confidence a rate hike could be needed this year.

Competitive easing: Sweden ramps up QE and could send rates further into negative territory
Mehreen Khan – The Telegraph
Sweden’s central bank will ramp up its quantitative easing programme and is ready to push interest rates further into negative territory, as it responds to a new wave of monetary expansion in Europe.

Italy backs central bank chief in corruption investigation
Giuseppe Fonte – Reuters
Italian Economy Minister Pier Carlo Padoan gave strong support on Wednesday to the country’s central bank governor who is involved in a corruption investigation.
Padoan told parliament the government had no intention of asking Bank of Italy chief Ignazio Visco to resign because the affair was not sufficiently serious.


Offshore Yuan Drops as PBOC Cuts Fixing for First Time This Week
The yuan traded in Hong Kong fell to a one-month low as China’s central bank cut its daily fixing for the first time this week, spurring speculation it will allow the currency to drop in coming days.

Do not rule out a run on sterling
Felix Martin – Financial Times
Is sterling riding for a fall? The UK’s current account deficit is certainly worryingly large. From less than 2 per cent of gross domestic product in 2011, it ballooned to more than 6 per cent in the fourth quarter of 2014 — the largest since modern records began in 1955.

Britons have more money in their pockets than ever before
Szu Ping Chan – The Telegraph
Britons have more money in their pockets than ever before, in a sign that the longest squeeze in living standards on record has come to an end.

Singapore Dollar to Drop 2% as Traders Reassess After MAS
Netty Idayu Ismail, Masaki Kondo and Yumi Teso – Bloomberg
Singapore’s dollar will weaken about 2 percent against the greenback by year-end after the central bank “slightly” reduced the pace of the currency’s gains versus those of its trading partners, analysts predict.

Indexes & Index Products

How Did European Active Managers Perform Over the Past 10 Years?
Daniel Ung – S&P Dow Jones Indices
Like in recent years, Greece has yet again dominated the European headlines for most of this year. Contagion effects have been somewhat contained, thanks to a more solid European economy and financial system. Nevertheless, the market has experienced bouts of heightened volatility, especially in June 2015 when the Greek authorities decided to shut their banks down to stem a potential liquidity crisis in the country. Given this backdrop, we have decided to compile data on the 10-year performance of European active managers for the first time, and here are the results.

The Fed Lulled Wall Street Into Expecting More Action
Gregg Greenberg – TheStreet
The Sit Rising Rate ETF (RISE) is down 5.6% since it was launched in February. Most investors at that time expected rates to be substantially higher by now but that has not been the case. Bryce Doty, senior fixed income manager at Sit Investment Associates, said the Federal Reserve essentially fooled — or lulled — Wall Street into expecting far more action.

Launch of FTSE China 50 Index Futures
Osaka Exchange, Inc. (hereafter “OSE”) is pleased to announce the launch of futures contracts on the FTSE China 50 Index (hereafter “FTSE China 50 Index futures”), which will coincide with the release of the next derivatives trading system (hereafter “Next J-GATE”) scheduled for the
middle of 2016

Fast-Growing ETFs Dealt a Setback; New York Stock Exchange pulls plan to speed approval process for actively managed products
Leslie Josephs – WSJ
The New York Stock Exchange this month withdrew a proposal to the Securities and Exchange Commission that would have expedited the regulatory approval of some exchange-traded funds, a setback for the fast-expanding ETF industry.

S&P DJI applies smart beta indexing to Middle East markets
ETF Strategy
S&P Dow Jones Indices, one of the world’s leading providers of financial market indices, has expanded its smart beta index series with two new indices catering to the Middle East and North Africa markets.

Blackrock Set to Join the S&P 100; Hewlett Packard Enterprise to Join the S&P 500; Others to Join S&P MidCap 400 & S&P SmallCap 600
S&P Dow Jones Indices will make the following changes to the S&P 100, S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices

ETF Asset Category With Killer Valuations
Tom Lydon – ETF Trends
Despite risks in some of the more volatile regions of the global markets, investors may want to position for further strength in emerging market exchange traded funds.


Overtaking China: India tames the dragon when it comes to buying gold
First Post
India regained its top position from China as the biggest overall consumer of gold in the first nine months this year with a total consumption of 642 tonnes, a survey said.

Russia is on a gold buying spree – should we be worried?
Merryn Somerset Webb – MoneyWeek
Yesterday, a fund manager friend sent me a chart containing a conundrum. It has two lines. One shows the gold price over the last two years, and the other the CRB metals index. The CRB is down by 30%. The gold price has fallen by a third of that. He asked me why I thought that was. The answer might be partly the same as it usually is when gold moves separately to other metals, I thought. It has safe-haven characteristics, and so when markets are volatile, investors (such as those on the MoneyWeek staff!) buy.

Will Fed Uncertainty Push Investors Into Gold? (Video)
Axel Merk, president and chief investment officer at Merk Investments, talks about global demand for gold and explains why Federal Reserve rate action will make gold an attractive investment. He speaks on “Bloomberg Surveillance.”

Venezuela selling gold to cover bond payments
Sebastian Boyd – Financial Review
Venezuela is selling off its gold reserves.
The value of bullion held by the government fell 9.9 per cent in April and May to $US11.8 billion, according to the most recent data from the central bank. That comes after a $US1.4 billion decline in March. The bank’s holdings of gold were down 28 per cent from a year earlier, while the spot price for the metal fell just 12 per cent.


New Bentley App Reads Emotions, Tells You Which $300,000 Bentayga SUV to Buy
Hannah Elliott – Bloomberg
Imagine walking into a Michelin-starred restaurant where the waiters hand you a list of every ingredient in the kitchen and say, “What do you want to eat?”
Only a devout foodie could discern the exact spices, broths, and herbs required to even approximate a five-star coq au vin or boeuf bourguignon.

Singapore still tops for doing business: World Bank
Straits Times
Singapore remains the easiest place to do business, while developing countries stepped up their pace of business-friendly reforms in the past year, according to a World Bank report published Tuesday.

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