First Impressions

Rick Lane Q&A: How Trading Technologies plans to revolutionize trading
Rick Lane has been looking into the future for some time now. The former co-founder of Tickit Trading, which was acquired by Trading Technologies in 2010, has quickly risen from chief technology officer in April 2012 to the new CEO of TT.

As CTO, he’s also been busy overseeing a major rebuilding of TT’s technology, which is soon to be unveiled. Now he now succeeds industry legend Harris Brumfield, who has run the company for the past 11 years. Brumfield will take on the role of chairman of TT.

John Lothian News editor-in-chief Jim Kharouf spoke with Lane on Thursday about the new post, what he brings to the top post at TT and where the firm is going next.

Quote of the Day

Ultimately the renminbi is likely to become a global convertible currency. The future of international economics and trade will shift in large part to business with and by China.

Kingsley Moghalu, deputy governor of Nigeria’s central bank, in the FT article “Why the dollar stays steady as America declines.”

Lead Stories

German Court Refers OMT Decision to Europe’s Top Court
Germany’s top constitutional court on Friday referred a decision on the legality of the European Central Bank’s bond-purchase program to the European Court of Justice, even as it harshly criticized the ECB’s bond plan.

***DA: We do not have that problem in the U.S. Or is it “that luxury?”

Full Steam Ahead: Rule Financial’s Emily Cates discusses EMIR Implementation
Doug Ashburn, John Lothian News
Emily Cates is a specialist in operational processing at Rule Financial, a London-based IT consulting firm specializing in global financial markets. In January 2014, Rule Financial released a white paper written by Cates and her colleague Amrik Chawla on the progress of the European Market Infrastructure Regulation (EMIR), which came into force in 2013. Cates spoke with John Lothian News editor-at-large Doug Ashburn on the status of EMIR implementation, how it compares with U.S. rules, and the challenges that lie ahead.

Comparing U.S. and Euro Area Unemployment Rates
Thomas Klitgaard and Richard Peck – Liberty Street Economics
Euro area growth has been stalled since 2010, mired in the sovereign debt crisis, while the United States has managed a slow but steady recovery following the Great Recession. Euro area and U.S. labor markets reflect these differing growth paths.

***DA: The ECB could always initiate a bond-buying program. Oh, wait. See story above.

MarketAxess Launches New Index for European Corporate Bond Market Liquidity
Wall Street Journal
MarketAxess Holdings Inc the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today launched a new liquidity index for the European corporate bond market. The European Bid-Ask Spread Index is the first detailed analysis of European bond prices over time and serves as a broad indicator of market liquidity and implied transaction costs.

Skating Close to the Edge, Again, on the Debt Ceiling
Here they go again. As of Friday, the Treasury will no longer have the authority to issue bonds as necessary to pay the government’s bills.

***DA: At all times, this problem is either urgent or nonexistent. 

Central Banks

ECB to gain far-reaching powers as euro zone banks’ supervisor
The European Central Bank will attain significant powers over the euro zone’s commercial banks once it becomes their supervisor later this year, including withdrawing bank licences and assessing acquisitions, it said on Friday.

***DA: This will work great until the next systemic crisis. Kind of like the euro.

ECB warns Hungary yet again to honor its central bank’s independence
The ECB has told Hungary again that it must respect the independence of monetary policymakers, saying the government cannot threaten central bankers with dismissal if they fail to submit a wealth declaration.

A lesson from Japan’s falling real wages
Cardiff Garcia | FT Alphaville
Here’s an observation from Capital Economics in response to this week’s news about Japanese wages that hasn’t been much discussed: The threat to the economic recovery from falling real wages may not be as big as many fear, given the trade-off between higher pay or more job creation. Nonetheless, consumers are understandably far from happy about the return of price inflation.

***DA: Once again, there is no free lunch.

U.S. Fed balance sheet details for latest week


Why the dollar stays steady as America declines
Gillian Tett –
Last week Nigeria’s central bank announced something that might make American politicians blink. Kingsley Moghalu, the deputy governor, pledged to convert almost a 10th of Nigeria’s $43bn reserves from dollars to the Chinese currency. “Ultimately the renminbi is likely to become a global convertible currency,” he explained, noting that “the future of international economics and trade will shift in large part to business with and by China”.

***DA: So America is in decline because Nigeria says so. 

Barclays appoints junior trader as head of forex desk
Daniel Schäfer in London –
Barclays has appointed a junior trader as interim head of its London spot foreign exchange desk, illustrating a thinning out of the ranks after a torrent of traders has departed or been suspended amid a global probe into alleged market manipulation.

***DA: Rumor has it he has also been named as the next heir of Downton Abbey. 

HFT service provider accepts Bitcoin payments
Philip Stafford –
A company that develops the tools used by high-frequency traders has become the first market infrastructure provider to accept payment for services in Bitcoins. Perseus Telecom, a US trading technology group, said on Thursday it would accept the controversial digital currency for its services worldwide and process transactions with GoCoin, the payment platform.

BitBeat: Apple Drops Bitcoin App From App Store, Bitcoiners Not Happy
MoneyBeat – WSJ
The big news in the bitcoin world today is word that Apple has dropped a popular bitcoin wallet from its App Store. Blockchain, a bitcoin wallet service, offered its iPhone app through the Apple store for two years. The app, which has been downloaded more than 120,000 times, was dropped by Apple on Wednesday.

No Discernible FX
John Carney – MoneyBeat – WSJ
Picture a ship sailing into a storm just as its captain falls overboard. While perhaps not guaranteed to cause a wreck, smooth sailing would be surprising.

Indexes & Index Products

US taxable bond funds see record net $10.7 bln inflows -Lipper
Investors in funds based in the United States poured a record net $10.7 billion into taxable bond funds in the week ended Feb. 5, while exchange-traded funds saw large outflows from stock funds, data from Thomson Reuters’ Lipper service showed on Thursday.

Nikkei 400 index to become Japan equity derivative benchmark
Cash business likely to stay with Nikkei 225 but derivative trades will shift


China gold demand strong after holiday; Indian premiums fall 
China returned to the physical gold markets strongly on Friday after a week-long break as banks and retailers looked to restock inventory following strong sales during the Lunar New Year holiday.

Gold Bugs: Gold Price Will Soar 
Rising demand for physical gold will soon translate into rising prices, some experts predict. “Physical gold is disappearing off the market at a terrible rate. As soon as that really starts to hit I think gold goes through the roof,” Jim Walker, CEO of Asianomics, tells CNBC. “That’s one of our biggest longs for the year.”

***DA: I realize that a bullish gold bug is not news. Read it anyway.

Fool’s Gold Report: The Waiting Game Continues for Gold 
The Motley Fool 
The main reason why metals are stuck in a rut today has to do with the uncertainty about the direction of the U.S. economy. Until recently, economic data suggested that the U.S. was firing on all cylinders, heading for a smoother recovery that would no longer require help from the Federal Reserve in order to sustain itself.

Gold prices uncertain; value still shines for some
By Chiara Milioulis, Medill Reports Chicago 
For centuries, gold was seen as a secure investment because it acted as a substitute for legally tendered money and served as a hedge against inflation. Both institutions and individuals invested in the safe haven, believing gold would keep them safe from the vagaries of economic misfortune.

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