First Impressions

MarketsWiki World of Opportunity Summer Intern Series Goes to London
John Lothian & Co. is pleased to announce the MarketsWiki World of Opportunity Summer Intern Education Series is coming to London on July 1st and 2nd, 2014 with the generous support of the CME Group.

Quote of the Day

“The big macro position – the top-down, which-way-the-wind-is-blowing position – is something you either got right or you got wrong this year.”

David Young, a former Pimco executive who now runs Anfield Capital Management in the story, “Contenders jostle for Bond King’s crown”.

Lead Stories

Fed Nominees Lael Brainard and Stanley Fischer Pass Senate Vote
The Senate on Thursday brought the Federal Reserve Board a little closer to full strength, confirming Lael Brainard, a former Treasury Department official, to one of the three open seats by a vote of 61 to 31.

BoE to lend to some shadow banks
Sam Fleming – Financial Times
The Bank of England has decided upon a significant extension of the range of institutions it is willing to lend to as it responds to the rise of shadow banking and the rapid evolution of the financial system.

AHEAD OF THE TAPE: Inflation ‘Dragon’ Shows Signs of Stirring
Spencer Jakab – WSJ
Is the beast about to reawaken? Three decades after Paul Volcker’s Federal Reserve slew what he called the “dragon” of inflation, its demise is being hotly debated. Coming reports on Friday and Tuesday about producer and consumer prices, respectively, for May could lend at least some ammunition to those fearful of more rapid gains.

A Guide To Gauging The Impact of the ECB’s Negative Deposit Rate
Todd Buell – MoneyBeat – WSJ
Wednesday marked the first day that the ECB charged banks for keeping overnight deposits with it. The move is designed to encourage bank lending, and help boost the euro zone’s still fragile economic recovery. What are the indicators that will tell us whether the ECB’s most daring policy move is working?

Contenders jostle for Bond King’s crown
Stephen Foley and Michael Mackenzie – Financial Times
Jeffrey Gundlach, the founder of the bond fund manager DoubleLine Capital, opened his midyear webcast for investors this week with a disquisition on the history of the penny. Given a penny for their thoughts – as per the title of Mr Gundlach’s presentation – bond investors listening might also talk of rising powers and declining empires. Except they might be referring to the growing success of DoubleLine and the questions hanging over Bill Gross, the man who, for a generation, has been called the Bond King.

No shelter for Britain in European halfway houses
Martin Wolf – Financial Times
Today, the UK is no longer a global power, while Europe is uniting peacefully. Legally, the UK is inside the EU. Psychologically, it is ever more outside it. It is, in brief, semi-detached. This is shown in its rejection of the euro, in the rise of the UK Independence party and in the promise of David Cameron, the prime minister, of a referendum on EU membership in 2017.

Pimco Chief Economist McCulley Sees Inflation Beaten, Rates Low for Longer
Michael J. Casey – MoneyBeat – WSJ
Pacific Investment Management Co. Chief Economist Paul McCulley argues that both inflation and interest rates will stay anchored for a long time to come, in his first missive since returning to Pimco in May.

Piketty Warns Scandinavia of Growing Income Inequality Risk
Kasper Viita and Kati Pohjanpalo – Bloomberg
The Nordic nations, home to some of the world’s most egalitarian societies, should be concerned about growing rates of income inequality, according to Thomas Piketty.

Guest post: No, you can’t have your risk-free returns back
Tomas Hirst – Financial Times
Governor Mark Carney, author and champion of the Bank of England’s Forward Guidance policy, appeared to depart from the usual script in his speech at the Mansion House yesterday. Having downplayed the likelihood of a rate rise any time soon at the launch of the Inflation Report in May many were surprised to hear him caution:

Taste for little luxuries suggest Japan’s tax rise hangover fading
Stanley White and Izumi Nakagawa – Reuters
Japan needs people spending with confidence if a radical strategy adopted by Prime Minister Shinzo Abe is to succeed in breaking the economy free of two decades of deflation and sub-par growth. Government data covering the period after the tax was increased to 8 percent from 5 percent at the start of April has begun to trickle in. Household spending and retail sales in April dropped the most in three years.

Central Banks

EU Lobbies Yellen on Bank Debt Rule
Ryan Tracy – MoneyBeat – WSJ
A senior European Commission official told Federal Reserve Chairwoman Janet Yellen that he will push for an in-depth study before moving forward with a pending rule on bank debt, suggesting it may be difficult for U.S. officials to forge an international consensus on the rule this year.

BoJ resists pressure for additional easing
Ben McLannahan in Tokyo – Financial Times
The Bank of Japan has kept its policy settings on hold, while noting a broad drop-off in demand in the wake of the consumption-tax increase pushed through in April.

ECB’s Weidmann Warns Against Central Bank Purchases of Government Bonds
Bundesbank President Jens Weidmann warned Thursday against using central bank money to purchase government bonds, suggesting the European Central Bank would face stiff opposition from its most powerful member bank if it decided to engage in such a policy that has been used aggressively by central banks in the U.S., Japan and U.K.

BOE’s Carney: Rates Could Rise Sooner Than Markets Expect
Bank of England Gov. Mark Carney said Thursday that interest rates in the U.K. could rise sooner than investors expect, sending the clearest signal yet that Britain’s central bank is inching closer to calling time on five years of record-low borrowing costs.

Central bank to revamp inflation-indexed bonds
Business Standard
The Reserve Bank of India (RBI) isn’t considering an increase in the foreign institutional investment (FII) cap on government securities, despite the limit always getting exhausted.

Federal Reserve Board Invites Comment On Proposal To Modify Regulations For Capital Planning And Stress Testing

Speech Given By Mark Carney, Governor Of The Bank Of England At The Lord Mayor’s Banquet For Bankers And Merchants Of The City Of London At The Mansion House, London, 12 June 2014


RMB to be a top-five payments and trade currency in three years – ICBC
Duncan Kerr – Euromoney Magazine
The renminbi has risen dramatically as a world payments and trade-settlement currency in the past three years. According to the Chinese bank ICBC, it could become a mainstream international currency as soon as 2017.

Ex-ABN FX Head Joins LMAX
Profit & Loss
LMAX Exchange has appointed Patrick Bartle, former global head of FX at ABN Amro, to the newly created position of global head of FX strategy

High-net-worth individuals shun emerging-market currencies
Euromoney Magazine
Despite the stunning revival of emerging-market currencies, and the fragile five in particular, high and ultra-high net worth individuals remain reluctant to increase their exposure, suggesting many funds have missed out on the rally.

U.S. Marshals to auction bitcoin seized in raid on Silk Road market
The U.S. government plans to auction about 30,000 bitcoin, the electronic currency, valued at about $17.4 million, on June 27 the U.S. Marshals Service said.

Indexes & Index Products

How International ETFs Work
Joshua M Brown – The Reformed Broker
My friend Brendan Ahern of KraneShares has been working with me for almost four years now, helping us with our international stock exposures and portfolio holdings. Brendan’s got a new white paper out that explains this process along with an illumination of many commonly held misconceptions and fallacies surrounding ETF structure and mechanics.


Metals Maneuver May be Losing Shine
Ira Iosebashvili – MoneyBeat – WSJ
Spiraling violence in Iraq and a possible resolution to South Africa’s mining strikes are adding a fresh element to a profitable metals trade.

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