First Impressions

We just clicked: John Rizzo brings photography skills globally
JohnLothianNews.com

Photography is the art of capturing a moment.

John Rizzo has been doing just that for years as the photographer for the FIA Expo events in Chicago. He spoke with John Lothian at Expo about how he learned photography as well as about his photo tours to Africa and Asia. Rizzo has taken photographers of all skill levels to exotic locales such as Tanzania, Ethiopia, Myanmar, Laos and Cambodia to teach individuals about culture and skill of taking a great photo.

A photojournalist who has worked with Newsweek, LA Times, Washington Post and the FIA Magazine and its conferences for years, Rizzo says he’s learned the art of photography. Rizzo said cameras today are better than ever, and take great shots. The problem, he says, is that most people don’t know how to do that.

Watch the video »

Quote of the Day

“In the face of the fiscal side not being really a realistic option to promote an economic recovery, the most important economic policymaker in the United States is the Federal Reserve.”

Shawn Sebastian, policy advocate for the Center for Popular Democracy in the story, “Liberals turn to Fed in populist push”.

Lead Stories

Hedge Funds Urged to Beat Benchmarks Before Charging Fees
Saijel Kishan – Bloomberg
Hedge fund investors are catching up with their private-equity peers. Five years after clients of leveraged buyout firms released a set of best practices for the industry, hedge fund clients are following suit.
The Teacher Retirement System of Texas and MetLife Inc. are among investors that yesterday called on managers to beat market benchmarks before charging incentive fees in a range of proposals that address investing terms. Funds should base performance fees on generating “alpha,” or gains above benchmark indexes, and impose minimum return levels known as hurdle rates before they start levying the charges, said the Alignment of Interests Association, a group that represents investors in the $2.8 trillion hedge fund industry.
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**** Why should you get paid for being average?

Sentinel ex-CEO may face 20 years in prison
By Lynne Marek, Crain’s Chicago Business
Federal prosecutors called the ex-CEO of collapsed money manager Sentinel Management Group an “unrepentant con man” and recommended he be sentenced to at least 20 years behind bars and repay $665.9 million to victims of his fraud. Bloom, 49, is free on bond for now and expected to be sentenced Dec. 8 by U.
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***** The bloom is long off of his rose.

What’s Worse: Big Banks or Bondholders Shaking Markets?
Lisa Abramowicz – Bloomberg
Banks may have gotten safer since the 2008 credit crisis, but risk is migrating to bond buyers.
That’s worrying analysts and policy makers alike, who see investors plowing into infrequently-traded debt while Wall Street reduces its role in making markets. The combination has “resulted in a new world for investors,” one that’s fraught with pockets of less trading and bigger price swings, Royal Bank of Scotland Group Plc (RBS) analysts wrote in a November report.
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***** The big con. Let me give you dividends with borrowed money.

Pimco Total Return Sold Agency, Sovereign Debt Amid Redemptions
Bloomberg
Pimco Total Return Fund (PTTRX) sold some of its most liquid assets during the third quarter as the September departure of Bill Gross triggered record redemptions.
The world’s largest bond fund reduced holdings of securities issued by government sponsored enterprises such as Fannie Mae and Freddie Mac by 22 percent to $31 billion at the end of September from June 30, according to a report posted on the fund’s website. Sovereign investments, composed primarily of Brazilian, Italian and Spanish government debt, fell to $31 billion as of Sept. 30, or about 16 percent of net assets, from $41.5 billion.
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***** I am sure the kitchen sink has been sold too.

CME raises offer for GFI to fend off rival bid
Philip Stafford, FT
CME Group, the US futures exchange operator, has raised its offer to shareholders to buy GFI Group, the interdealer broker, and fend off a rival offer from BGC Partners.
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***** BGC still claims cash is better. We shall see.

Banker blowback; Liberals plot to block Obama’s treasury nominee.
Ben White – Politico
In a sign of their increased determination to shape both the national debate and the future of the Democratic party, top liberals are coalescing around a campaign to derail President Barack Obama’s nominee of a top Wall Street investment banker for a senior administration job, setting up a showdown with moderates of their own party.
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****** This is one merger that is not going well.

Pimco Slows Rush of Cash Out the Door; Outflows Mark Slowdown in Investors Pulling Out of Fund
Kirsten Grind and Gregory Zuckerman – WSJ
Two months after Bill Gross quit Pacific Investment Management Co., the giant Pimco Total Return bond fund that he managed for 27 years is showing signs of stabilizing.
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***** Oh, you want your cash out. Please hold.

Regulators Deliver Yet Another Message on Leveraged Lending
Gillian Tan and Mike Spector – WSJ
Regulators don’t want banks piling high levels of debt on companies. But banks might escape penalties if they make loans in good faith. At least that’s the latest message from regulators, according to people familiar with it. Representatives for the Federal Reserve and the Office of the Comptroller of the Currency told bank executives in a meeting before Thanksgiving in New York to stop financing deals that run afoul of earlier guidance the regulators issued discouraging loans that saddle companies with large amounts of debt, said the people.
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***** Are you trying to kill private equity or what?

Central Banks

Goldman Joins Deutsche Bank on RBA Cuts as Growth Slows: Economy
Michael Heath – Bloomberg
Goldman Sachs Group Inc. joined Deutsche Bank AG in predicting Australia’s central bank will be forced to resume cutting interest rates as growth slows.
Both institutions expect the cash rate will be lowered to 2 percent next year from the current record-low 2.5 percent. Money markets are pricing in an 88 percent chance the Reserve Bank of Australia will implement a quarter point cut in the next 12 months after government data today showed the economy grew just 0.3 percent last quarter, less than half the rate economists forecast.
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U.S. Federal Reserve Dec. Beige Book Summary (Text)
BloombergBusinessweek
The following is the summary text of the Federal Reserve’s Summary of Commentary on Current Economic Conditions.
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Liberals turn to Fed in populist push
Peter Schroeder – The Hill
Left-leaning groups and lawmakers are taking their populist economic fight to the Federal Reserve, as they seek to exert new influence over key monetary decisions and a pair of vacancies at the central bank. The Fed has faced heavy criticism from the right for years, but the other side of the aisle is now beginning to publicly push the institution for preferred policies.
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Currencies

ICE to Start Yuan, Commodities Futures in Singapore
By Chanyaporn Chanjaroen, Bloomberg
Intercontinental Exchange Inc. (ICE) will start its first five futures contracts to be listed and cleared in Singapore next year, including products on the Chinese currency, Brent crude and gold.
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Euro Slides to 2-Year Low Before ECB as Dollar Gains on Economy
Rachel Evans and Andrea Wong – Bloomberg
The euro slumped to a two-year low as reports showing economic growth in the U.S. contrasted with weak data from Europe, amplifying calls for European Central Bank President Mario Draghi to unveil further easing tomorrow.
The dollar touched a seven-year high against the yen as the Federal Reserve said “employment gains were widespread across districts” after a gauge of U.S. service industries expanded at the second-fastest pace in nine years. The greenback reached the strongest in four years versus the Aussie as Goldman Sachs Group Inc. joined Deutsche Bank AG in predicting an interest-rate cut for Australia. Russia’s ruble bounced from a record low amid speculation the central bank intervened to support the currency.
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Indexes & Index Products

S&P Dow Jones Indices Expands Factor-Based Index Offering with S&P Momentum Indices
Press Release – via MarketWatch
S&P Dow Jones Indices (“S&P DJI”), one of the world’s leading providers of financial market indices, today announced the launch of the S&P Momentum Indices, a brand-new factor-based index family designed to measure the performance of securities in the global equity markets that exhibit persistence in their relative performance. This rollout further strengthens S&P DJI’s world-class factor-based index fleet by capturing the important and well-documented factor of Momentum.
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Gold

Gold Volatility Reaches 9-Month High on Whipsaw in Oil
Debarati Roy – Bloomberg
Oil is making gold investors cross-eyed.
Because gold traders often track the cost of oil, which can impact consumer costs and inflation, a whipsaw in crude futures is spurring the biggest price swings for bullion in almost nine months. Adding to the pain for investors in the metal is a dollar rally that’s curbing demand for alternative assets.
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Gold rises 1 pct as firmer oil brings back investors
Marcy Nicholson and Clara Denina – Reuters
Gold rose 1 percent on Wednesday, holding above $1,200 an ounce, boosted by firmer oil prices that prompted investors to shuffle positions while largely shrugging off the firm U.S. dollar.
The metal had fallen to a near three-week low on Monday after Switzerland voted against a proposal to boost its gold reserves. It then recovered to its highest in a month that same day as oil prices moved up from a five-year low.
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Shanghai Gold Trade Passes Record as China Seeks More Sway
Bloomberg
Gold trading on China’s largest physical bullion bourse is already exceeding last year’s record volume as the world’s biggest consumer seeks to exert its influence on the global market.
The volume of all contracts on the Shanghai Gold Exchange, including those in the city’s free-trade zone, was 12,077 metric tons in the 10 months to October, compared with 11,614 tons during all of 2013, according to data on the bourse’s website. This may climb to 17,000 tons by the end of the year, the exchange’s Chairman Xu Luode said at a conference today.
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