First Impressions

Dear Readers:
Our goal each day is to inform (and amuse) and help you understand key elements of this industry. This is also our goal for our upcoming MarketsWiki World of Opportunity Summer Intern Education Series on July 1st and July 2nd in London – to help young students and professionals learn more about the financial markets.

We have 14 speakers lined up over three 90 minute sessions at King’s College. As this is our first event in London we need your help. We would like you to sign up your interns for any of the sessions we have listed on our Marketswiki Education site – http://education.marketswiki.com/event/2014/london-2014/

If you have interns working for your firm this summer, you obviously value the idea that connecting with young talent now can help your firm or this industry in the future. Yep, we said it, these students are our future. This program enforces that.

You can see our full speaker list on our site; they are experienced professionals from the exchange, regulation, technology, and brokerage space. Each will help paint a picture for students that this industry is still rich with opportunity and open to new talent and ideas.

So in this appeal, we ask you to sign up your interns or newer employees. It’s time well spent for them. And they will be the ones who carry our industry forward.

To sign up, click on the link above. If you don’t know the names of your interns just yet, as they may not have started their internships, please reserve a spot by emailing John Lothian at johnlothian@johnlothian.com

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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.
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Quote of the Day

“She ticked off an impressive list of reasons why the U.S. economy should be doing better in the months ahead. But she knows the Fed has been consistently over-optimistic about economic growth, and she didn’t exude confidence.”

David Wessel, a senior fellow at the Brookings Institution in the story, “Fed Sees Slower Growth, but Maintains Plans to Trim Stimulus”.

Lead Stories

Fed Sees Slower Growth, but Maintains Plans to Trim Stimulus
NY Times
The Federal Reserve said Wednesday that economic growth had rebounded after a nasty winter even as it sharply cut its economic forecast for 2014 to reflect the unexpected contraction during the early months of the year.
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Post-FOMC: What Strategists Read in Yellen’s Words
Chiara Albanese – MoneyBeat – WSJ
The markets liked what they heard from the Federal Reserve Wednesday, sending the S&P 500 to a fresh record and prompting a rally in U.S. government bonds and a fall in the dollar. Thursday, they still like it, with the Yellen effect buoying European markets. Now that the immediate excitement of the press conference is over, here’s what strategists make of it.
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Saba, Brevan Struggle to Profit as Volatility Disappears
Katherine Burton and Kelly Bit – Bloomberg
For Boaz Weinstein, founder of Saba Capital Management LP, historic calm in credit markets is proving to be more than boring. It’s costing him money.
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The big bond squeeze
Peter Lee, Louise Bowman – Euromoney Magazine
Any new debt issue offering a scrap of yield has met huge demand from investors in recent months. As money floods into fixed-income funds, asset managers cannot put it to work in illiquid secondary markets, leaving the primary market as their only liquidity window. Small investors complain of being unfairly squeezed out from new-issue allocations. Large investors grumble that all other buyers are inflating their orders. And the elephant in the room? Nervous banks sense that regulators are preparing to pounce on traditional allocation practices in debt capital markets.
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Argentines want debt deal as economic woes pile up
Reuters
Argentina’s decision to talk with holdout creditors to end its long-running bond dispute and possibly avoid another damaging default is likely to be popular in a country that is sliding into recession, even as many Argentines say they despise the hedge funds involved.
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Does He Pass the Test?
Paul Krugman – The New York Review of Books
Stress Test is meant to be a story of successful policy—but that success is defined not by what happened but by what didn’t. America did indeed manage to avoid a full replay of the Great Depression—an achievement for which Geithner implicitly claims much of the credit, and with some justification. We did not, however, avoid economic disaster.
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Comparing Yields is Risky Business at BOE
Richard Barley – MoneyBeat – WSJ
It was wrong the first time someone suggested bond yields showed investors thought Spain was no more risky than the U.K. It was still wrong Wednesday afternoon when Kristin Forbes, set to join the Bank of England’s rate-setting committee in July, repeated the idea at a U.K. parliamentary hearing.
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A game of mega-city states
Izabella Kaminska – Financial Times
Here’s a radical idea to deal with the London house bubble from Rob Perrins, managing director of Berkeley Group, the upmarket housebuilder. Give London its own interest rate.
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If everyone is a mini-LTCM that’s fine, right?
Dan McCrum – Financial Times
You may detect a sceptical tone there, but the question is real: does it matter if something unexpected occurs in the world of credit and rates? We’ve been on this point for a while — assessment of risk is sticky, until it’s not — but were struck by a recent conversation with a market maker about his clients:
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Central Banks

Yellen: No Bubbles Here
Steven Russolillo – MoneyBeat – WSJ
On a day when the S&P 500 set yet another all-time high, Fed Chairwoman Janet Yellen said she isn’t particularly concerned about stock prices at current levels.
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Yellen: Investors Shouldn’t Take Ultra-Low Rates For Granted
Michael S. Derby – MoneyBeat – WSJ
Federal Reserve Chairwoman Janet Yellen warned financial market participants not to become overly confident the central bank’s ultra-easy monetary policy will be around forever.
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Beware central banks on share buying sprees
Ralph Atkins – Financial Times
Like the rest of us, the world’s central bankers have had to cope since 2008 with low interest rates wiping out returns on their investments. They may attract little sympathy – who was it who slashed rates? But the consequences matter for markets, especially if central banks follow their own injunctions and move into riskier assets, notably equities.
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Swiss National Bank Reaffirms Commitment on Currency Floor
WSJ
The Swiss National Bank on Thursday reiterated its pledge to intervene in the foreign-exchange market to prevent the Swiss franc from strengthening beyond 1.20 to the euro, saying the limit remains the “right tool” to curb upward pressure on the currency.
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BOE Uncertainty Spells Market Volatility
Alen Mattich – MoneyBeat – WSJ
The era of unanimous votes by the Bank of England’s policy setting committee looks set to become a thing of the past.
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Norway’s Central Bank Leaves Interest Rates Unchanged, as Expected
WSJ
Norway’s central bank left interest rates unchanged Thursday, as expected, and delayed an expected increase until the end of 2015, amid slowing domestic growth and lower rates abroad.
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Federal Reserve Issues FOMC Statement
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Currencies

What London’s New Renminbi Deal Means
Chiara Albanese – MoneyBeat – WSJ
During a three-day trip to London LSE.LN -0.83% which ends today, Chinese premier Li Keqiang announced a number of measures to boost the City’s financial center as the key Western hub for trading the Chinese currency, the renminbi.
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Norway’s Central Bank Sends Krone Sliding
Chiara Albanese – WSJ
The Norwegian krone dropped sharply Thursday after the country’s central bank left interest rates unchanged as expected but surprised markets by suggesting it intends to keep the current policy rate in place for longer than expected.
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HSBC Seeks Bitcoin Savvy Interns
Anna Irrera – MoneyBeat – WSJ
Global banking giant HSBC is interested in the benefits of bitcoin, asking aspiring marketing interns to argue for or against the virtues of the cryptocurrency.
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Newsflash Bitcoin people, we already have a private money system
Izabella Kaminska – Financial Times
The following from Paul McCulley, chief economist at Pimco and Zoltan Pozsar, a senior adviser at the US Treasury department, came out earlier this week in the FT, but is worth rehashing in light of this relatively absurd call from the Institute of Economic Affairs for the UK government to privatise the pound and replace it with Bitcoin (capital B).
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Gold

Why is the World of Gold and Silver Changing? – The Short Answer
WSJ
Bullion fixes are a-changing. Discussions are underway to reforms the methods used to set the prices of silver and gold following a wider probe into benchmarks, such as the FX fix. The problem is no one quite knows how those reforms will play out and the timeframe for a solution, for the silver fix at least, is tight.
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Seven Proposals Made to Replace the London Silver Fix
WSJ
Seven proposals have been made for a replacement to the London silver fix, including a joint pitch by CME Group Inc. and Thomson Reuters.
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Gold Miners Feel Lucky in Search for Nevada Buried Riches
Liezel Hill – Bloomberg
It’s not just gamblers, celebrity chefs and brides-to-be that find Nevada irresistible. About 400 miles north of the Las Vegas strip, the world’s two biggest gold producers are doing some prospecting too.
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