This week the entire office, except for Jeff Bergstrom and me (Sarah), are down in balmy Boca Raton, Florida, for the 39th annual Futures Industry Conference. They will be conducting interviews, making videos, attending panels and hobnobbing with industry execs by the pool. The agenda includes The Financial Times’ Gillian Tett moderating a panel of international exchange CEOs, a keynote address by CFTC Chairman Mark Wetjen, and a lunch with keynote speaker Ted Koppel, whom I had the pleasure and luck to interview several years ago and who is a terrific speaker and a complete gentleman. Jeff and I will be holding down the fort in breezy Chicago. Since nearly everyone in the industry is down in Boca, it will be just us and a few tumbleweeds. If you are not attending the conference, feel free to drop by our offices to keep us from getting too lonely. –Sarah Rudolph
***JB: Since we are stuck in “breezy Chicago” I helpfully included a list of perks some companies provide in a story under “Miscellaneous” below. Just saying…
Quote of the Day
“Total debt levels, the sum of household, government and corporate debt, haven’t declined at all in recent years. Each time there’s a wobble, the central banks turn on the taps. Either that works by creating growth with asset prices eventually coming into line with fundamentals, or it doesn’t and we’re in for a massive fall.”
Ben Bennett, a credit strategist in London at Legal & General Investment Management in the story, “Debt Exceeds $100 Trillion as Governments Binge”.
Green light for Thomson Reuters rates data arm
Philip Stafford – FT.com
Thomson Reuters has won UK regulatory approval for a new subsidiary responsible for oversight of the data company’s role in compiling financial benchmarks, such as the scandal-hit Libor.
Debt Exceeds $100 Trillion as Governments Binge
John Glover – Bloomberg
The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates.
**JB: One has to wonder who has $100 trillion to loan out in the first place. Oh yeah…no one does. No “everyone” does either (that is more than the Gross World Product). The magic of accounting in action.
Bull Market Rivals ’90s at Half Valuation as Demand Broadens
Lu Wang – Bloomberg
The American equity rally that just turned five years old is starting to match the 1990s Internet bubble when it comes to its speed.
That’s where most of the resemblances end.
Buffett’s Omaha Shows Pension Tapeworm Eating Funds: Muni Credit
Jennifer Oldham and William Selway – Bloomberg
Every time he eats out in his hometown, billionaire investor Warren Buffett helps pay for police and firefighters to retire.
Like everyone else who dines at a restaurant in Omaha, Nebraska, Buffett is charged a 2.5 percent tax that’s used in part to defray $850 million in unfunded retirement expenses for city workers. The levy, in effect for more than three years, hasn’t closed the gap. So the mayor is trying to persuade employees to accept lower retirement payments.
El-Erian Exit Is Pimco Distraction as Gross Saves Legacy
Alexis Leondis – Bloomberg
Bill Gross, in an investment outlook in April entitled “Man in the Mirror,” questioned whether he was truly a great investor as he pondered his legacy in a new era of shrinking bond returns.
Ireland Aims Small In Return to Regular Bond Auctions
Emese Bartha – MoneyBeat – WSJ
Ireland is next week set to hold its first pre-announced regular government bond auction since September 2010—another baby step on its way to rehabilitation in a market that once punished it heavily.
Greek banks raise fresh capital, easing pressure from ‘troika’
Kerin Hope in Athens – FT.com
Greece’s creditors have dropped a demand for the country’s largest banks to raise an extra €2bn of fresh capital after three Athens lenders said they were poised to make sizeable bond and share offerings on international capital markets.
Maybe China’s a Bigger Worry than the Fed
Alen Mattich – MoneyBeat – WSJ
Will Chinese monetary policy be the more likely cause of global market volatility over the coming months than the Federal Reserve’s? The current upheavals in China’s corporate debt market might well offer a clue.
Bank of England to hold independent inquiry into FX fixing claims: report
The Bank of England may appoint a judge, academic or senior financial industry executive to run an independent inquiry into its actions in relation to allegations it allowed manipulation of the foreign exchange market, the Sunday Telegraph reported.
Standing on the shoulders of cryptocurrency giants
Izabella Kaminska | FT Alphaville
Dorian Satoshi Nakamoto, the LA-based man that Newsweek alleged on Thursday was the probable creator of the Bitcoin protocol, denied all involved in an AP interview — but the plot continues to thicken. As the International Business Times reports on Friday, an online chat account associated with the email featured in the original Bitcoin white paper has become active again. Surprise, surprise — the user is claiming that the man featured in the Newsweek article is not Satoshi Nakamoto.
Bank of England’s Carney faces grilling over foreign exchange scandal
Mark Carney faces probably his toughest questioning so far as Bank of England governor next week when lawmakers will seize on a foreign exchange scandal to press their demands for tighter oversight of the central bank.
***JB: “It is a tale told by an idiot, full of sound and fury, signifying nothing.” ~William Shakespeare
Forward Guidance Risks Stoking Instability, BIS Says
Emma Charlton – Bloomberg
Central banks employing forward guidance risk creating financial instability by revising the policy or keeping borrowing costs low for too long, according to economists at the Bank for International Settlements.
Fed’s Plosser Sees High Bar for Change in Pace of Tapering
Mark Deen and Steve Matthews – Bloomberg
Federal Reserve Bank of Philadelphia President Charles Plosser, who votes on policy this year, said recent encouraging economic data isn’t enough to change the pace of the central bank’s asset purchases.
We knew this day would co… wait never mind the day hasn’t come yet
Cardiff Garcia | FT Alphaville
If Janet Yellen and the FOMC are breathing a sigh of relief after today’s jobs report, it’s probably just a very shallow sigh. In the household survey, the unemployment rate inched back up to 6.7 per cent because of both new entrants to the labour force and weak employment growth.
Hilsenrath Analysis: Fed Likely to Continue Taper, Consider Changing Forward Guidance
Jon Hilsenrath – MoneyBeat – WSJ
There is likely enough to like in Friday’s jobs report to keep the Federal Reserve on track to scale back its monthly bond buying by another $10 billion to $55 billion at its March 18-19 policy meeting.
China February inflation tame, room for policy easing
China’s consumer prices rose at their slowest rate in 13 months in February as pork prices fell by their most in over a year, a sign that slowing growth rather than rising prices poses a bigger risk to the world’s second-biggest economy.
Fed’s Dudley pushes policy guidance change at March FOMC: report
William Dudley, the head of the Federal Reserve Bank of New York, said a policy meeting later this month is a good time for the U.S. central bank to adjust its published guidance on when interest rates would eventually rise, according to a published report.
Rapid Currency Trades May Kill Arbitrage, N.Y. Fed Paper Says
John Detrixhe – Bloomberg
Growth in high-frequency and algorithmic trading may promote efficiency in the spot-trading foreign exchange market, according to a research paper published by the Federal Reserve Bank of New York.
SEC Said to Probe Whether Forex Rigging Distorted Options
Keri Geiger and Silla Brush – Bloomberg
The U.S. Securities and Exchange Commission is investigating whether currency traders at the world’s biggest banks distorted prices for options and exchange-traded funds by rigging benchmark foreign-exchange rates, according to two people with knowledge of the matter.
Commerzbank, Macquarie Alter Outlook for Surprisingly Strong Euro
James Ramage – MoneyBeat – WSJ
The euro on Friday climbed against the dollar to $1.3915, a level last reached in October 2011. The rise began after Thursday’s European Central Bank meeting, where policy makers took no action to cut key interest rates or to initiate other measures to loosen monetary policy, moves which would have weakened the euro.
Newsweek ‘Stands Strongly’ Behind Its Bitcoin Piece
Erik Holm – MoneyBeat – WSJ
Newsweek is standing behind its bitcoin story. The magazine on Friday released a statement saying that it “stands strongly behind” the reporter who wrote the article that fingered a California man named Dorian Prentice Satoshi Nakamoto as the likely inventor of bitcoin.
Bitcoin founder’s writing matches nothing in Dorian Nakamoto’s background
Karl Smith | FT Alphaville
We’ve already mentioned Felix Salmon’s thoughtful critique of the Newsweek cover story by Leah McGrath Goodman, but there’s one point we want to elaborate on.
Lakota Indian Promotes New Digital Currency, Mazacoin
Paul Vigna – MoneyBeat – WSJ
Most countries are casting a suspicious eye toward bitcoin and viewing cryptocurrencies as a potential threat. But one Lakota Indian hopes his nation will take a different approach: he hopes to make a digital currency the tribe’s official currency.
Indexes & Index Products
Russell Said to Lure Blackstone to Bain for $3 Billion Sale
Matthew Monks, Matthew Leising and David Carey – Bloomberg
Russell Investments, the indexing and fund-management unit of Northwestern Mutual Life Insurance Co., is drawing takeover interest from suitors including Blackstone Group LP (BX) and Bain Capital LLC as Goldman Sachs Group Inc. solicits bids for the firm, people with knowledge of the matter said.
Vanguard seeks SEC permission to issue actively managed ETFs
Vanguard Group, the No. 1 U.S. mutual fund company, on Friday took a step towards offering exchange-traded fund versions of dozens of its well-known actively managed mutual funds.
India’s Nifty Futures Fall After Benchmark Indexes Reach Record
Rajhkumar K Shaaw – Bloomberg
Indian stock-index futures dropped after the benchmark equity gauges jumped to all-time highs.
SGX CNX Nifty Index futures for March delivery fell 0.5 percent to 6,522 as of 10:37 a.m. in Singapore. The underlying CNX Nifty Index on the National Stock Exchange of India Ltd. surged 2 percent to 6,526.65 on March 7, a record. The S&P BSE Sensex (SENSEX) rallied 1.9 percent to 21,919.79, an all-time high. The Bank of New York Mellon India ADR Index of U.S.-traded shares declined 1.1 percent to 1,236.47.
Gold Most Bullish Since 2012 as Goldman Sees Slump: Commodities
Elizabeth Campbell, Megan Durisin and Debarati Roy – Bloomberg
Gold is getting more attractive to hedge-fund managers even as Goldman Sachs Group Inc. says the metal’s surprising rally this year will soon fizzle.
Hedge funds and other speculators expanded bets on higher prices for a fourth week in New York futures and are now the most bullish since December 2012, government data show. While gold is off to its best start in six years after topping $1,350 an ounce, Goldman’s Jeffrey Currie says chances are increasing that prices will slump to $1,000 for the first time since 2009.
***SR: So much uncertainty…so good for gold (for now).
Coutts Adds Gold as Demand in China Climbs With Ukraine Risk
Glenys Sim – Bloomberg
Coutts & Co. is adding gold for investors as rising wealth in China and increasing political risks including in Ukraine spur demand, helping prices rally from the biggest annual decline in more than three decades.
Pimco Japan Names Yamamoto as President as Takano Stepping Down
Mariko Ishikawa and Shigeki Nozawa – Bloomberg
Pacific Investment Management Co.’s Japan unit said Shinichi Yamamoto will succeed Makoto Takano as president when the latter steps down June 20 after more than 12 years with the company.
Ex-Jefferies Trader Litvak Convicted of Defrauding Buyers
Chris Dolmetsch – Bloomberg
Former Jefferies & Co. Managing Director Jesse Litvak was convicted in the only criminal case against an individual in connection with a U.S. program that used bailout funds to spur investment in mortgage-backed securities.
***SR: We could probably use more criminal cases in this and other areas.
The Five Most Outrageous Company Perks in the World [Video]
In the battle for top talent… Who cares about competitive pay and good health benefits? More companies are luring workers with outrageous perks. In Bloomberg’s Ranx, we go beyond the paycheck.
***JB: Some of these seem sensible to me. Others are just awesome. Hope my boss sees this and takes note (hint hint).