First Impressions

Fintech Exchange 2015: A Chicago Story

Fintech is more than just a buzzword. Fintech is a movement – a global, top to bottom overhaul of financial systems, from consumer transactions at the grocery store to speed of light derivatives trades, to multi-billion dollar interbank payments. And on April 23, 2015, the center of fintech will be Chicago.

Barchart OnDemand, in association with FinTEX Chicago, will host Fintech Exchange 2015, a half day event featuring live presentations, a panel discussion and networking, all centered on the state of technology for financial markets and trading firms.
Watch the video »

Quote of the Day

“Early indications point to a good chance of celebrating year seven.”

Sam Stovall, U.S. Equity Strategist at S&P Capital IQ in the story, “The Bull Market Turns Six. Can It Make It to Seven?”

Lead Stories

Greece Rescue Talks to Resume as Euro Area Demands Urgent
Rebecca Christie, Corina and RuheIan Wishart – Bloomberg
Greece will resume talks with its creditors this week after euro-area finance ministers demanded urgent action to avert an impending cash crunch.
Greece could gain access to part of its remaining bailout funds if it follows through with the required reforms, Dutch Finance Minister Jeroen Dijsselbloem said after a meeting in Brussels on Monday. Dijsselbloem, who heads the finance ministers’ group, said talks will resume Wednesday to get a better picture of Greece’s needs and the steps it is taking.

Goldman Finds Stock Value in the Last Place You’d Think to Look
Michael P Regan – Bloomberg
They say when you’re searching for something that seems hopelessly lost, it’s always in the last place you think to look.
Like, you may find the car keys in the refrigerator. Or the remote control in the Tupperware drawer. Or, if you’re looking for value in the U.S. stock market, you could find it hidden in plain sight in the Nasdaq 100 Index.

China Short Sellers Target World’s Biggest Broker Rally
The world-beating surge in Chinese brokerages is reversing as short sellers increase bets against the stocks and investors speculate regulatory changes will erode earnings.
Securities firms in China with market value of at least $1 billion have dropped about 15 percent on average this year, after more than doubling in 2014. Short interest, or wagers on a decline, in China Galaxy Securities Co. and Shanghai-based Haitong Securities Co. have climbed to at least 12 percent of outstanding shares, the highest among global peers tracked by Bloomberg and Markit Group Ltd.

The Bull Market Turns Six. Can It Make It to Seven?
Kristen Scholer – WSJ
The current bull market is entering some rarefied air.
Monday marks the six-year anniversary of the bottom of the financial crisis. And the Dow Jones Industrial Average is up a whopping 173% since then. As the bull market officially turns six, it now ranks as the fourth longest of the 23 bull markets for the Dow since 1900, according to research firm Leuthold Group.

Fidessa Explores Challenges Of Global Execution
Press Release
Fidessa group plc (LSE: FDSA) has today released a new paper entitled Shifting sands – the harsh realities of executing in today’s markets. Authored by Will Winzor-Saile, Electronic Execution Product Specialist at Fidessa, the paper explores how the electronic execution landscape has evolved over the last 10 years and reveals the challenges that now exist for brokers wanting to trade across global markets.

Bonds: How firm a foundation?
Tracy Alloway and Michael Mackenzie, FT
Regulators question if corporate debt could withstand a sudden reversal
On the eve of the financial crisis, the office of market supervision at the US securities watchdog included more than 100 employees charged with monitoring stocks and options, two people keeping an eye on $3.5tn worth of municipal bonds, and no one dedicated to the $5.4tn corporate bond market, where thousands of companies sell their debt.

Americans Get Burned by Europe Bond Rally That’s Undone by Euro
Lisa Abramowicz – Bloomberg
You can’t blame U.S. credit investors for wanting to ride this wave of European central bank stimulus. As policy makers buy bonds from traders in the market — the thinking goes — they’ll bid up prices.
The problem is buying euro-denominated corporate bonds hasn’t necessarily been a good trade because the euro has been tanking relative to the dollar.

EU Rejects Deutsche Börse Appeal Against Blocked Merger With NYSE-Euronext
Tom Fairless – WSJ
The European Union’s decision to block a planned $17 billion tie-up between securities exchange operators NYSE Euronext and Deutsche Börse AG was legitimate, the EU’s second-highest court said Monday, rejecting an appeal from Deutsche Börse.
The deal, which would have created the world’s largest combined market for trading stocks and derivatives, was rejected by EU regulators in early 2012. U.S. antitrust authorities had approved the deal in late 2011, subject to relatively minor conditions.

Eurozone Not Viable in Current Form – Top U.K. Fund Manager
Laurence Fletcher – WSJ
The eurozone is not viable in its current form, according to Neil Woodford, one of the U.K.’s most highly regarded fund managers.
Mr. Woodford, who is head of investment at Woodford Investment Management LLP, with £5 billion of assets under management, and was previously head of U.K. equities at Invesco Perpetual, said despite efforts by politicians to keep the currency bloc together, “ultimately I think economics has a habit of overruling politics.”

Concerns About Deflation Show Up in an Obscure Derivatives Market; A Prediction Market for Inflation, or Deflation
Something unusual is happening to prices right now: They are falling.
The recent sharp decline in gas prices is part of the story, but there is now growing fear that the Federal Reserve will undershoot its own 2 percent inflation target, hindering the economic recovery. There’s also a small but worrying risk that the economy could enter a deflationary rut.

France’s Hollande Casts Fate With Ex-Banker Macron; As the French president shifts away from tax-the-rich policies, economy minister Emmanuel Macron vows to be ‘more confrontational’
French Economy Minister Emmanuel Macron got an earful in January from U.S. technology and retail executives as they lectured him in a meeting at the Venetian hotel in Las Vegas about France’s inhospitable business reputation.

At Goldman Sachs, Stress Test Results Could Endanger an Important Profit Source
After Goldman Sachs’s poor performance on Federal Reserve stress tests, analysts and investors are worried that the bank could be barred from buying back its own stock or increasing dividends.

Gross Has First Janus Redemptions as Clients Pull Money
Madeline McMahon and Miles Weiss – Bloomberg
The client redemptions that plagued Bill Gross at his old job have followed him to his new one as well.
Gross’s Janus Global Unconstrained Bond Fund suffered its first month of net withdrawals since he joined, with clients pulling $18.5 million from the fund in February, Chicago-based research firm Morningstar Inc. estimated. The redemptions left $1.45 billion in assets in the fund, which declined 0.8 percent this year to trail 96 percent of similarly managed funds, Morningstar said.

Swiss Banks Battle Undeclared Accounts; Spat Over Bank Account Set Up for Companion Illustrates Issue
Before he died in 1980, Maurice Pinot set up a Swiss bank account with 1 million francs ($1 million). For decades, the account paid out dividends and interest to Mr. Pinot’s longtime companion, and after her death, to her daughter, Micheline Fournie, a French citizen with a U.S. residency permit.

Japanese Companies Issue Record-Long Bonds; Investors Turn From Government Bonds in Search of Yield
The average maturity of domestic corporate bonds issued in Japan this year is at a record length, as companies take advantage of rock-bottom interest rates to issue longer-term debt to investors searching for extra yield.

Jefferies cuts commodities jobs in New York, Chicago: sources
Investment bank Jefferies Group LLC [JGLL.UL], owned by Leucadia National Corp (LUK.N), has cut about 20 jobs in its commodities futures brokerage in New York and Chicago, three sources familiar with the cuts said on Friday.

Tullett Prebon hires new Chief Risk Officer
Tullett Prebon
Tullett Prebon, one of the world’s leading interdealer brokers, today announced that Giles Triffitt has joined the company as Chief Risk Officer. His appointment further strengthens the Tullett management team, following the arrival of Philip Price as General Counsel in February.

Central Banks

ECB Buying Starts New Era for Bonds, Euro; Currency heads toward parity with dollar; paying to hold debt
The arrival of the European Central Bank’s huge bond-buying plan Monday is forcing investors to prepare for the once unthinkable: paying to hold debt issued by the eurozone’s one-time trouble spots—even countries that have recently relied on financial bailouts to stay afloat.

ECB Said to Leave Negative-Yield Losses Unresolved Under QE
Jana Randow – Bloomberg
As the European Central Bank’s bond-buying program gets under way, officials are still haggling over the details.
When policy makers resolved last week to start purchases of 60 billion euros ($65 billion) a month in sovereign debt and other assets, they failed to agree on how to share losses from buying bonds with negative yields, according to three euro-zone central bank officials. National central banks might try to avoid such securities for now, according to one of the people, who asked not to be identified because the talks are private.

Edwards Sees Central Banks Strangling Economy While You See QE
Simon Kennedy – Bloomberg
Albert Edwards has been warning investors to avoid stocks for the better part of two decades. His concerns have included the threat of deflation, asset bubbles and misguided central banks.
The global strategist at Societe Generale SA in London is adding a new worry to his list: a decline in currency reserves at the world’s central banks. That means a “key measure of global liquidity is now in freefall,” he said in a March 6 report to clients.

Federal Reserve rate hike is the biggest threat to stocks
CNN Money
Imagine celebrating your birthday by listening to nonstop talk about your demise.
Such is life for the bull market in stocks, which officially turns six years old this week.
Rather than focusing on the 200% surge in the stock market, investors are far more concerned about whether or not the incredible run in stocks will live to see its seventh birthday.

The big crazy experiment the Federal Reserve should have tried in 2008
Jeff Spross – The Week
Ever heard of negative interest rates? In the economic world, they’re rather like Bigfoot or the Loch Ness monster; people theorize about their existence, but you never actually see them.
Yet, lo and behold, negative interest rates are cropping up across Europe: government bonds for Switzerland, Denmark, and Germany, along with bonds for corporations like Nestlé and Shell, have been sporting minus signs. That’s sparked a discussion across the economic blogosphere about just how this could happen. We may have misunderstood the trade-offs between various forms of saving, how those trade-offs affect economic behavior, and thus whether negative interest rates can actually work.


China Versus India – Currencies, Reform And Growth
Colin Lloyd – Seeking Alpha
Last month, PWC, in “The World in 2050” produced a long-term forecast for economic growth in which they predicted that India could become the second-largest economy in the world by 2050 in purchasing power parity (PPP) and the third-largest in market exchange rate (MER) terms.

A currency headwind for the US economic recovery
Desmond Lachman – TheHill
Among the more striking international economic developments over the past year has been the marked appreciation of the U.S. dollar. U.S. policymakers would be ignoring this development at their peril. Since not only is the recent sharp dollar appreciation likely to both dampen U.S. economic growth and reduce inflation; it is also all too likely to be a harbinger of further significant dollar appreciation in the months ahead that could have a material impact on the U.S. economic outlook.

Are virtual currencies a plus for poor countries? – podcast transcript
The Guardian

Indexes & Index Products

Why Vanguard Is Secretive About Its Stock ETFs
Vanguard Group differs from other mutual-fund providers in notable ways, including its well-honed obsession with keeping shareholder expenses lower than its rivals.
Vanguard also takes a less-appreciated but equally standard-breaking approach toward exchange-traded funds. Unlike other major ETF providers, Vanguard doesn’t divulge the daily holdings of its stock ETFs. Instead, Vanguard reports month-end portfolio data with a 15-day lag.

WisdomTree Europe Hedged Equity Fund Is on a Roll
A strong dollar, a weak euro and a $1.16 trillion European Union stimulus program have set WisdomTree Europe Hedged Equity Fund (HEDJ) on fire.
The $12.9 billion exchange-traded fund, which offers exposure to European multinationals while hedging out the impact of the euro, looks set to surpass WisdomTree Investments ‘ flagship $14.2 billion WisdomTree Japan Hedged Equity ETF (DXJ) in terms of assets by year-end.

Michael Lipper: lessons on how to be a good loser
Michael Lipper – Citywire
One of the least favorite tasks of a professional investment manager is to disappoint clients with a report of performance below some benchmark. Contrast this with how we look at our own accounts which we focus on too infrequently and get pleased or less as the account progresses to building one or more nest eggs to meet our or our beneficiaries’ long-term needs.


Can Modi unlock $1 trillion worth of gold stashed away in India’s lockers?
Vivekananda Nemana – Quartz
Indians love to hoard gold. The World Gold Council estimates that 22,000 tonnes of gold are in private hands across the country—$1 trillion (Rs.62.6 lakh crore) stashed away in cupboards, safes and temple vaults, collectively worth over half the size of the Indian economy.

Is Gold About to Become the Next Safe Haven Trade? – Video
Todd Horwitz, founder at, and Bloomberg’s Scarlet Fu discuss the recent rebound in the price of gold in today’s “Futures In Focus” on “In The Loop.”

Stay clear, gold selloff could get uglier
Ansuya Harjani – CNBC
Gold suffered its biggest single-day drop since December 2013 on Friday, after robust U.S. jobs data fanned expectations that the Federal Reserve will soon raise rates, and analysts warn that further declines are likely.
“Gold has fallen from grace and its ascent to $1,306 in January now looks to be a false dawn and a distant memory,” Howie Lee, investment analyst at Philip Futures wrote in a note on Monday.

Mexican Vigilante Justice Hits $7 Billion Gold Mine
Jason McGahan
A road sign on the side of the highway alerts motorists that a steep decline lies ahead. It is a yellow diamond-shaped sign, and the figure of the motorist behind the wheel is riddled with gaping, rusted bullet holes.
A boy in a straw hat leads a donkey by a rope along the shoulder of the highway. Around a bend, three black vultures tear at a fresh piece of roadkill, reluctant to lumber away even as four shiny white trucks, moving together in a convoy, come roaring toward them. The first and last trucks are pickups, each with a machine gun mounted in its bed manned by a police officer. Each officer wears a black combat helmet, body armor, and polarized goggles.

Kerang man unearths $135,000 gold nugget
Andi Yu – The Age
A Kerang man has unearthed a 2.7 kilogram gold nugget, worth about $135,000.
Seasoned prospector Mick Brown, 42, was a couple of weeks into giving up smoking and was getting grumpy so his wife told him to leave the house for some fresh air.
So Mr Brown went prospecting near Wedderburn in an area he had been before.
He started moving across it with his detector when the machine went off loudly over a particular spot.

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