First Impressions

Robin Hood made his mark robbing from the nobility – wealthy landowners and such – and sprinkling the proceeds among the subsistence-level workers, or so the story goes.

In that regard, calling a tax on financial transactions a “Robin Hood Tax” is a bit of a misnomer. Such a tax burden would not be shouldered by the supposed rich banking barony, but rather by the retail end users and the institutional investors who manage and invest on behalf of pensions and retirement accounts. In other words, the “little guys.”

True, such a tax would harm the banks, brokers, exchanges and service providers doing business in countries subject to such a tax, but it would likely ignite an exodus to friendlier tax regimes. When that happens, there will be fewer transactions to tax, and less overall revenue flowing through the sector and into the local economy. That idea does not sit well with Christian Noyer, governor of the French central bank.

For what it’s worth, the truest form of a Robin Hood Tax is a progressive income tax. France already has one of those.

Quote of the Day

“I do not believe it was ever the intention of the French government to do something that would trigger the destruction of entire sections of the French financial industry, trigger a massive offshoring of jobs and so damage the economy as a whole.”

– Christian Noyer, French central bank governor, on the proposed financial transaction tax

Lead Stories

France central bank chief says Robin Hood tax is ‘enormous risk’
Hugh Carnegy and Michael Stothard in Paris – FT.com
Europe’s planned financial transaction tax poses “an enormous risk” to the countries involved and could threaten financial stability, the governor of France’s central bank has said.
http://jlne.ws/16GbbyS
***DA: Pretty much any tax proposal is a bad idea according to those who bear the brunt.

At Fed, Some Want a Rule for When to Act
Victoria McGrane – WSJ.com
The Federal Reserve has struggled to communicate clearly about its plans for winding down its $85 billion-a-month bond-buying program. Some Fed officials think they’d have an easier time if they established a rule to determine when and how to trim the purchases.
http://jlne.ws/16Gbr13
***DA: Like if they imposed a ceiling on the national debt, they would be able to… oh, wait. Never mind.
**JK – Our video interview with Constance Hunter says otherwise, that the Fed has communicated quite clearly. The markets weren’t listening.

Debt: A deceptive calm
Ralph Atkins in London – FT.com
James Carville, an adviser to former US President Bill Clinton, wanted to be reincarnated as the bond market, complaining that it was more powerful than presidents or popes. “You can intimidate everybody,” he moaned. He should have moved to Rome.
http://jlne.ws/16Gbr14
***DA: No one seems to be worrying about a bond market upheaval in the debt-ridden developed world. But be careful – bond market purges tend to sneak up on you when you least expect it. Kind of like James Carville.

ECB Bond Figures Paint Picture of a Happier Euro Zone
Christopher Lawton – MoneyBeat – WSJ
Spanish and Italian banks have been offloading their government bonds in recent months, cashing in on increased demand from buyers amid signs of some stability in the euro-zone’s most problematic members.
http://jlne.ws/16GbtWt

Dutch Copy Fannie Mae Seen by BlackRock as Taxpayer Risk
Maud van Gaal & Corina Ruhe – Bloomberg
The Dutch, whose economy is suffering from a housing-market collapse made worse by tighter regulation, plan to issue governm ent-backed mortgage bonds to loosen lending and ensure the country avoids a repeat of the 2008 crisis when credit dried up.
http://jlne.ws/16GbtWw
***DA: I think I have seen this movie before.

A superpower at risk of slippage
FT.com
It has been 10 days since the US government shutdown came to an end. And if the bond market were your guide, there would appear to be no lasting costs – the 10-year US Treasury yield dipped below 2.5 per cent this week for the first time since August.
http://jlne.ws/16Gbrhj

Central Banks

Yellen Poised to Rival Obama With Financial Power
Caroline Salas Gage & Steve Matthews – Bloomberg
Janet Yellen, nominated by President Barack Obama to succeed Ben S. Bernanke as chairman of the Federal Reserve, is poised to become the most economically powerful woman in the world.
http://jlne.ws/16GbtWx

India central bank hints at rates rise
Gulf News
The Reserve Bank of India (RBI), which holds its monetary policy meeting in Mumbai on Tuesday, said in its macroeconomic report on the eve of the decision that inflation remains “above comfort levels”.
http://jlne.ws/1g7aAPg

ECB’s Asmussen backs ‘allocative’ fiscal union
CentralBanking.com
Board member ‘sees a role’ for a European fiscal union in ensuring resources are allocated efficiently; suggests other forms of centralised budgeting are less useful
http://jlne.ws/Hc6HK6

Currencies

FX Math: Party’s Over for Australian Dollar as China Looms Large
Vincent Cignarella  – MoneyBeat – WSJ
The rally in the Australian dollar wasn’t going to last forever. Until this week, the Aussie had been enjoying a great ride, rising nearly 10% against the U.S. dollar since the start of September.
http://jlne.ws/16GbtWy

Citigroup Currency Staff Work Into Night in London on Dodd-Frank
Julia Verlaine – Bloomberg
For the foreign-exchange sales team in Citigroup Inc. (C)’s London office, Dodd-Frank regulations mean extra hours at work. At least two members of staff have been staying until after 9 p.m. because some clients are no longer allowed to deal with Citigroup colleagues in New York, Alex Jackson, head of European investor sales, foreign exchange and local markets, said in a phone interview on Oct. 25.
http://jlne.ws/1eZcSNm

Bitcoin Surges Over $200. Then Plunges Back Under It
Paul Vigna – MoneyBeat – WSJ
The value of bitcoin has been surging this week. Wait, strike that. It just plunged.
http://jlne.ws/16GbtWz

NetDania Preps Trading-Data FX Workstation
Max Bowie – WatersTechnology
Danish foreign exchange data display and technology provider NetDania is preparing to roll out a trading-enabled version of its NetStation data and analytics workstation, which will allow retail brokerage firms to white-label the platform as a trading front-end to offer to clients, and also allow traders to submit orders from the web-based version of NetStation, providing they have existing brokerage accounts with participating brokers.
http://jlne.ws/16Gbrhm

Indexes and Index Products

Structured product liquidity could lead to speculative trading, says former UK SPA chairman
Vita Millers – Risk.net
A secondary market for selling retail structured products after they have launched is almost non-existent in the UK, but while advisers would like to reassure investors that they will able to sell products before maturity, industry participants at the UK Structured Products Association (SPA) conference in London this week warned of the possible side effects of such liquidity – including speculative trading or advisers being unprepared to explain how redemption prices are formulated.
http://jlne.ws/16Gbrhp

Retail investors embracing risk fuel US junk bond fund revival
Vivianne Rodrigues in New York – FT.com
Global retail investors have renewed a push into the riskiest corners of the US credit markets, lured by the relatively high yields provided by assets such as junk bonds.
http://jlne.ws/16GbtWC

Emerging Global Advisors Chooses “FTSE Beyond BRICs” Index For ETF
http://jlne.ws/16Gbcmw

Gold

Gold producers accused over ‘misleading’ data
Neil Hume in London – FT.com
A furious row has broken about between a high-profile gold investor and the industry body charged with promoting the precious metal on behalf of the world’s biggest gold producers.
http://jlne.ws/16Gbrht

Strange gofo cry heralds trouble for gold
John Dizard – FT.com
Something is unsettling the animals in the forest of the gold market. Usually there is a chorus of chirrups and squeaks that are significant, momentarily, for one species or another, such as a few cents of arbitrage between Zurich and London, or a dollar-an-ounce rise in India caused by a dealer’s near insolvency. Then the noise settles down to the murmur of wind through the trees.
http://jlne.ws/16Gbrhw

Spain’s mini gold rush beset by concerns over development
Tobias Buck in Madrid – FT.com
Until recently, anyone looking for treasure in the Spanish regions of Galicia and Asturias would have been directed to the sea: the waters off the northwest tip of the country are renowned for prized seafood. However, interest – and controversy – has been growing over the riches on dry land.
http://jlne.ws/16Gbrhx

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