First Impressions

New Energy: Nasdaq Prepping For Launch Of Nasdaq Futures

Nasdaq Futures was announced in March with a goal of shaking up the energy futures markets. Since then, Nasdaq’s team has been busy building infrastructure and signing up new members. The question is, will they challenge the likes of CME Group’s Nymex or the Intercontinental Exchange?

Hans-Ole Jochumsen said that Nasdaq Futures, or NFX, has the model to compete with established markets.
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Quote of the Day

“Today’s just like any other day — some things have come to a head, this Greek thing has come to a head, but it’s really not all that big a deal on the world stage,” he said. “This is a country of, you know, not very many people.”

Julian Robertson in the story, “Hedge-Fund Billionaire Julian Robertson Shrugs as World Churns”

Lead Stories

Greece and Its Creditors Start Talks Again on Debt Crisis
NY Times
Greece and its European creditors began talking again on Tuesday about how to keep Greece afloat financially, but appeared not to be moving fast enough to prevent the country from missing a debt payment due at the end of the day.
With just hours to go before the deadline for the payment, Prime Minister Alexis Tsipras of Greece asked the other nations that use the euro to provide another bailout, which would buy time for Athens to renegotiate its crippling debt load.

What’s the Timetable to a Grexit? – The Short Answer
We are in the climax of Greece’s debt crisis. It has been a slow-burn crisis, a five-year-long string of high-drama confrontations amid tedious talks. These next three weeks are crucial. The endgame is July 20, when Greece must repay a bond to the European Central Bank.
Barring a last-minute U-turn by Greek Prime Minister Alexis Tsipras to accept the economic policies that Greece’s creditors are demanding as the condition of further bailout loans, here is how that endgame would look.

Goldman Sachs: Here’s Why All Those Junk-Rated Bonds Will Be Fine
The escalating Greek crisis. The looming Federal Reserve interest rate hike. The potential closure of U.S. capital markets. None of these are enough to threaten junk-rated companies, according to analysts at Goldman Sachs.
The near-zero interest rate environment that has remained in place since the collapse of Lehman Brothers has allowed junk-rated corporate borrowers to tap the market repeatedly, selling more bonds at a cheaper financing cost and pushing out their borrowings.

No Default Seen in Credit Swaps by Greek Failure to Pay IMF
Analysts and traders see little chance that Greece’s failure to pay $1.7 billion to the International Monetary Fund will trigger payouts on credit-default swaps.
The derivatives insuring Greek sovereign debt won’t cause a failure-to-pay credit event because the IMF loan is a bilateral agreement and doesn’t prompt cross defaults on government bonds, according to Royal Bank of Scotland Group Plc. The IMF loan is also excluded from swaps coverage because it predates a 2012 cutoff, according to JPMorgan Chase & Co. and Barclays Plc.

John Paulson loses millions on Greece and Puerto Rico
Talk about a horrible way to start the week. A number of hedge funds that were already bracing for losses on Greek debt also found out late Sunday night that they would likely have to swallow big losses on investments in Puerto Rico as well. One of the biggest losers appears to be John Paulson.

Hedge-Fund Billionaire Julian Robertson Shrugs as World Churns
Bloomberg Business
Julian Robertson stayed calm after Greeks lined up at ATMs to hoard cash, the longest bull market in China’s history tumbled to an end and Puerto Rico’s governor said the U.S. commonwealth couldn’t pay its debt. The billionaire even had reasons to smile.

Loads of Debt: A Global Ailment With Few Cures
Dealbook – NY Times
There are some problems that not even $10 trillion can solve.
That gargantuan sum of money is what central banks around the world have spent in recent years as they have tried to stimulate their economies and fight financial crises. The tidal wave of cheap money has played a huge role in generating growth in many countries, cutting unemployment and preventing panic.

You can take the advisor out of the brokerage firm…
In 2009, with the financial crisis having reached a crescendo, it became apparent that the best, most stable and reliable business on Wall Street was wealth management. Wirehouse broker/advisors had worked tirelessly to keep their clients cool and were not the cause of any massive blowups, as both investment banking and trading had been.

Banks and exchanges turn to blockchain
Philip Stafford, FT
The blockchain — the technology that underpins bitcoin — has been called “the future for financial services infrastructure”. Now banks, clearing houses and exchanges are becoming increasingly excited at the prospect of blockchain fundamentally transforming their business models.

CFTC Proposes Narrowing Wall Street’s Foreign Swaps Loophole
by Silla Brush, Bloomberg
The top U.S. derivatives regulator took a step toward preventing Wall Street banks from evading the Dodd-Frank Act and shifting some of their trading overseas.

German watchdog says Deutsche Bank has catching up to do
Deutsche Bank (DBKGn.DE) has some “catching up” to do under its new leadership to ensure its systems and processes are up to the requirements of international financial rules, the head of Germany’s financial watchdog Bafin said.
“It’s not enough to have a good strategy,” Bafin president Felix Hufeld told the Frankfurt business journalists’ club.

Greece’s future hangs on 72 words
Kerin Hope in Athens, FT
Giorgos Alavanos was asked on Monday during a coffee break with co-workers to explain the cumbersome 72-word question that Greeks must answer with a “yes” or “no” vote in next Sunday’s referendum.

Prosecutors launch Deutsche Libor probe
James Shotter, FT
Frankfurt prosecutors are examining the role played by individuals connected with Deutsche Bank’s involvement in the Libor rate-rigging scandal — potentially opening up a new front in the affair that has rocked Germany’s biggest bank. The investigation is the first step in a procedure that could lead to criminal charges.

Central Banks

Central Banks’ Euro Reserve Holdings Drop to Lowest Since 2002
Euro reserves accumulated by global central banks dropped in the first quarter to the lowest since 2002 as the currency’s value plummeted amid bond-buying by the European Central Bank.
The euro’s share of disclosed currency holdings fell to 20.7 percent in the three months through March from 22.1 percent in the previous period, the fifth straight quarterly decline, according to International Monetary Fund data.

Greece and Puerto Rico Crises Could Mean Fed, Again, Becomes World’s Central Bank
If the Greece and Puerto Rico debt crises cause worldwide panic, scaring investors and causing liquidity to dry up, the U.S. Federal Reserve just might step in to help, becoming, in essence, a central bank to the world.
You read that right: The Fed must be prepared to help maintain liquidity in world markets. There’s precedent.

The central bank chief who saw the 2008 crash coming takes back that whole ‘next Great Depression’ thing he said
Business Insider
Last week, Raghuram Rajan, India’s rock star central bank governor who is credited with foreseeing the 2008 financial crisis, said the world is currently facing Great Depression-era problems.
But now the central bank is backtracking on those comments.

Bill Gross: Here’s why the Fed needs to hike rates
Bond guru Bill Gross believes the Federal Reserve will raise interest rates once this year, but only because it needs to prove that it can.
The Janus Global Unconstrained Bond Fund manager contended Tuesday that the Fed should move from near-zero interest rates to show that the U.S. economy can function without the extra boost.


China cuts interest rates as Yuan targets IMF
A rough week for China’s stock market and heavy losses in the Shanghai Composite Index pushed the central bank to cut interest rates on lending for the fourth time in less than a year.
The unexpected move of the bank was aimed to give more confidence to investors and boost the slowing economy.
The yuan’s path is the bright side of the story and remains on a strong trajectory to join the global currency basket.

Renminbi’s inclusion in IMF basket of reserve currencies can spark major reforms
South China Morning Post
The International Monetary Fund’s highly anticipated move to include the renminbi in its official basket of reserve currencies later this year would symbolically be a major political and diplomatic triumph for Beijing as it will be seen as official recognition of China’s development and its rising clout in the global economy.
But the deeper impact of adding the yuan to the dollar, euro, yen and pound in the special drawing rights would be to usher in a fresh round of bold market reforms for the world’s major quasi-capital and quasi-socialist economy following its accession to the World Trade Organisation in 2001.

CURRENCIES: Dollar Books 1st Quarterly Loss Against The Euro Since March 2014
Euro largely stable Monday despite Greece worries
The dollar finished the second quarter lower against the euro on Tuesday, its first quarterly loss against the shared currency since the first quarter of 2014.
The buck also weakened against every major currency except the Japanese yen and New Zealand dollar.

Indexes & Index Products

Highlights: 2015 Russell Indexes Reconstitution
Russell Indexes
The annual Russell Indexes Reconstitution took place after the market close on Friday, June 26, 2015. Reconstitution ensures that the global equity opportunity set is accurately represented across security weights, styles, market segments and country assignments.
This overview provides the new U.S. and Global market cap ranges and high level changes to the Russell Indexes.

New Amundi bond index ETF launched on Xetra
ETF tracks the performance of corporate bonds with a variable interest rate
Xetra/Börse Frankfurt
Xetra/Börse Frankfurt: A new exchange-listed bond index fund issued by Amundi has been available in Deutsche Börse’s XTF segment since Tuesday. The ETF is tradable via Xetra and Börse Frankfurt.

Greek ETFs Plunge as Investors Fly Blind
by Lu Wang, Oliver Renick, Bloomberg
Exchange-traded funds tracking Greek equities, transformed into vehicles for pure speculation after the Athens Stock Exchange was closed, plunged the most since 2011 in the U.S. and were halted in Germany and France.

MSCI says China faces complex process to join index
An executive at index provider MSCI Inc. on Monday said Chinese regulators face a complex process to satisfy requirements for mainland shares to join one of its widely tracked indexes.
“You cannot underestimate the complexity of the process involved in making the necessary changes,” said Chris Ryan, MSCI’s MSCI, head of Asia-Pacific. The country’s securities regulator, the China Securities Regulatory Commission, “has to coordinate amongst nine or more government agencies,” he said.


Texas to the Fed: Don’t Mess With Our Gold
Wall Street Daily
On June 12, Texas Governor Greg Abbott signed a law establishing the Texas Bullion Depository.
The purpose of Texas’ Fort Knox – which will be administered by the state comptroller – is to store gold and other precious metals on behalf of the State of Texas and its citizens.
During the signing ceremony, Abbott said that under the new law Texas would “repatriate $1 billion of gold bullion from the Federal Reserve in New York to Texas.”

Gold futures suffer a loss for the year’s first half
Gold futures on Tuesday marked a loss for the first half of the year as speculation that Greece and its creditors could strike a last-minute deal and strength in the U.S. dollar helped send the metal’s prices lower for the session.

China targets counterweight in gold trade with yuan fix
A decade after China kicked off a series of gold market reforms, plans to establish a yuan price fix mark one of Beijing’s biggest step so far to capitalise on the country’s position as the world’s top producer and a leading consumer.
While no immediate threat to the gold pricing dominance of London and New York, the benchmark could ultimately give Asia more power over bullion trade, particularly if the yuan becomes fully convertible, industry sources say.

Gold: A Safe Haven No More?
One of the big themes we’ve been exploring this week as the Greek debt negotiations deteriorate (see my colleague Kathleen Brooks’ latest analysis of the situation here) is the appeal of so-called “safe haven” assets. Most traditional safe haven assets are acting as expected, with money flowing into the Japanese yen, US dollar, US Treasury bonds, and the Swiss franc (though the SNB’s decision to intervene in its currency may redirect some of that capital toward the British pound), but there has been one notable laggard: gold.

Here’s where some Greeks are stashing their cash — in gold sovereigns
Spooked by the country’s escalating debt crisis, Greeks yanked billions of deposits out of the country’s banks in recent months until the government shuttered them. Where is the money going?
While some of it is likely stuffed under mattresses or deposited in overseas accounts, a chunk has already been used to buy gold GCQ5, -0.59% — gold coins to be exact.


Dude, Where’s My Pot ETF?
Pot has been generating lots of buzz.
Twenty-three states and the District of Columbia have legalized marijuana, either for medicinal or personal use, while an additional 13 have planned votes by 2016. If the trend toward legalization continues, there’s big profit potential, considering $2.5 billion in legal sales last year—and the estimated $60 billion in illegal sales. ArcView Market Research estimates that the national cannabis market will reach $10.8 billion in sales (retail and wholesale) by 2019.

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