First Impressions

Katie Burgoon, Trading Technologies – Gone But Not Forgotten: How The Floor Trader Mentality Can Prepare Everyone For Success

“You would never have met a floor trader who did not live and breathe the markets every day. They literally could not wait for the alarm clock to go off every morning.”br />
Though the open outcry system of order execution has been relegated (mostly) to the history books, the trading floor mentality lives on in the hearts and minds of the thousands of former floor participants. And any one of them would say that the things that defined a floor trader – passion, a strong voice and even a confident swagger – can prepare anyone for a successful career. Katie Burgoon, who spent many years on the Chicago Board of Trade floor, now sits on the other side of the hiring line in her role as VP of global human resources at Trading Technologies. She says that, regardless of gender, years of service or role within a company, one should aim to channel the inner floor trader to find success.

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Quote of the Day

“It seems everybody the last month had a five-day period where they got wiped out. Anybody who made concentrated bets is hurting right now. It’s been a war. You had to be a ninja to come away unscathed during this rally.”

Tom Lee, managing partner and co-founder of New York-based Fundstrat in the story, “Tom Lee Says Only Ninjas Are Making Money in This S&P 500 Rally”

Lead Stories

Here’s How They Fight on Wall Street
Sonali Basak, Chris Dolmetsch – Bloomberg
Ex-partner Kramer says Weinberg offered to invest in new firm
Four men say firing was ruse to keep their $60 million payout
The knives finally came out in the fight between Peter Weinberg and Michael Kramer.

Fund houses lose $700bn in ‘particularly brutal’ Q3
Attracta Mooney – FT
Seven of the world’s largest fund managers collectively lost more than half a trillion dollars in assets during the third quarter as they struggled to cope with the fallout from Black Monday. The slump has sparked fears investors will pull more money during the final months of the year.

Bill Ackman’s Terrible, Horrible, No Good, Very Bad Week Just Got Worse
The activist investor has been front-and-center in the turmoil at Valeant Pharmaceuticals International Inc.VRX.T +5.41%, which has been rocked by accusations from a short seller and questions about its business model. Mr. Ackman is close to Valeant chief executive Michael Pearson and spent much of the past year endorsing him as the next big thing in pharmaceutical companies.

Tom Lee Says Only Ninjas Are Making Money in This S&P 500 Rally
For a stock market that’s gone up as fast as this one, there’s a lot of pain going around.
The Standard & Poor’s 500 Index has climbed almost 11 percent since falling to a 10-month low on Aug. 25, restoring about $1.4 trillion to share prices. Meanwhile there have been 13 instances in the past two weeks of companies posting one-day drops of 10 percent or more — one of the highest rates of single-stock crashes in four years.

Ex-Goldman Banker Faces Criminal Case in Leak From Fed
Dealbook – NY Times
Federal prosecutors are preparing to announce a criminal case against a former Goldman Sachs banker suspected of taking confidential documents from a source inside the government, a rare criminal action on Wall Street that comes as Goldman itself is facing an array of regulatory penalties over the leak.

Treasuries Epicenter Tilts Toward Chicago With High-Speed Firms
Susanne Walker Barton – Bloomberg
As dealers curb risk, internalize trades, HFT sway grows
Windy City rivals Wall Street as destination for bond jobs
Chicago is challenging New York’s long-held position at the center of what’s been called the world’s most important financial market.

‘Spoofing’ trial in Chicago to test market clampdown
Gregory Meyer in New York and Philip Stafford in London – FT
The email from meatpacker JBS to the biggest futures exchange bore the subject line “Algo Question”.

Citi Found Itself Briefly Exposed to $400 Million Hit Through Small London Hedge Fund’s Trades; Executives discovered a giant potential loss; money is recovered
A small London hedge-fund firm and a lapse in bank-risk controls caused a panic inside Citigroup Inc. in July, after its executives discovered a series of trades they estimated could cost the bank as much as $400 million, people familiar with internal discussions at the time said.

U.S. money laundering probe into Deutsche Moscow unit widens – FT
U.S. regulators are expanding their probe into Deutsche Bank AG as a money laundering investigation of a Moscow unit has widened into possible sanctions violations, the Financial Times reported, citing sources.

Even the biggest banks cannot afford $6bn systems errors
Simon Samuels – FT
The revelation last week that Deutsche Bank accidentally sent $6bn to one of its customers, and that it did not recover the money until the next day, is a vivid reminder that banks deal in large numbers — billions of dollars and billions of transactions on a daily basis. To do this without error requires robust IT systems — and, while there is no suggestion that the Deustche Bank episode was directly an IT failure, it is entirely possible that under-investment in IT was at least a contributory factor to what happened.

J.P. Morgan junior bankers fired for cheating on test; Cheating on internal tests appears to be growing on Wall Street
By SUE CHANG – MarketWatch
It is never a good thing when cheating shows up in the same sentence as banking. But on the heels of a cheating scandal at Goldman Sachs, J.P. Morgan Chase & Co. found itself mired in a similar situation.

Central Banks

The 57-Year-Old Chart That Is Dividing the Fed
Neil Irwin – NY Times
Next week, when Federal Reserve officials meet to decide whether to raise interest rates for the first time in nine years, one question will be front and center: How much faith should be placed in a line on a graph first drawn by a New Zealand economist nearly six decades ago, based on data on wages and employment in Britain dating to the 1860s?

The Most Important Developments Since the Fed Met in September
Federal Reserve officials meet in Washington this week to vote on whether the nation’s economy is on sufficiently solid footing to sustain the first-interest rate increase since 2006.
Many investors don’t believe there will be a move this year, according to pricing in federal funds futures, but the Fed has not taken it off the table. The move, when it comes, is expected to be just 25 basis points. That’s tiny, but the message will be monumental: It will show that the Fed believes the U.S. economy has healed from the worst recession since the Great Depression and the move will stoke expectations for more increases ahead.

Yellen, consensus-builder, needs to send strong signal at Fed meet
Federal Reserve Chair Janet Yellen, praised as an adept listener and consensus builder, may need to adopt a stronger tone at this week’s policy meeting if she expects to keep a December interest rate rise in play.
Yellen’s inclusive style has been tested recently by two fellow governors who publicly appeared to disagree with her view, shared by Vice Chair Stanley Fischer, that the Fed will probably need to raise interest rates this year.

ECB Easing Means Southern Comfort for Eurozone
The first round of quantitative easing from the European Central Bank had a big effect on eurozone government bonds. The market is now on notice for a second dose. Southern Europe could be a key beneficiary.


Severe widening could make dollar market unfeasible
Public sector issuers this week priced US dollar bonds at spreads dramatically wider than they achieved in the summer, triggering worries that funding in the currency may become uneconomical if the trend continues.

The Bitcoin Startup Boom Comes Back Down to Earth
Jeff Garzik has spent the past several months pitching investors on a pretty out-there startup idea. He proposed building computer servers attached to satellites, loading them with data about everyday bitcoin transactions, and then launching those satellites into space. As one of the core developers of the virtual currency, Garzik was able to attract the attention of venture capitalists, who have been eager to throw cash at all sorts of bitcoin startups this year. However, the fundraising efforts failed.

Charles Goodhart: China’s Slowdown May Help Solve One of Europe’s Major Economic Problems
Will the euro area be around in 10 years?
Charles Goodhart, who wrote a seminal paper in the mid-1990s that predicted some of the problems the currency union would encounter, isn’t so sure.

Indexes & Index Products

S&P report: UK active funds struggle to beat benchmark over long term
Investment Week
A large proportion of active UK equity funds fail to beat their benchmarks over long time periods, despite strong one-year numbers, according to a report from S&P Dow Jones Indices.

Indexers must warm to low carbon investing
Investors concerned about the risks of climate change, whether environmental or financial, are not aligning their investments with their concerns. Most portfolios are invested largely or wholly in line with stock market indices and as currently constituted, those indices are out of line with the aim of limiting the average rise in global temperature to 2° Celsius.

Alibaba Gains From MSCI China Inclusion: $1.6 Billion Passive Buying Seen
U.S.-listed Chinese companies will be included in the MSCI China Index in November. The official weighting and stock names will be released on November 12 after market close and the official inclusion will occur after the close on November 30.

The Rieger Report: Puerto Rico – a 22% Weight on the High Yield Muni Market
Indexology – S&P Dow Jones Indices
As the Puerto Rico saga continues it has created a drag on the high yield municipal bond market. The weight of Puerto Rico debt in the market place as measured the market value of bonds in select indices as of September 29, 2015

MSCI’s move to include Hong Kong-China ADRs in EM index may hit Indian stocks
The Economic Times
Global index provider MSCI’s move to include Hong Kong-China American Depositary Receipts (ADRs) into the EM index starting from November may lead to outflows from Indian equities. According to Morgan Stanley, India could see outflows of Rs 3,700 crore between November and May 2016 due to the proposed changes.


Hedge Funds Are Getting Their Gold Bets Wrong
Megan Durisin – Bloomberg
Net-long wagers reach 8-month high before prices slump
Money managers increased bullish holdings for five weeks
Gold prices are befuddling hedge funds, which are posting a track record no better than a coin flip when it comes to betting on the metal.

Gold rally brings out options bulls
With gold on track for its second-best month this year, traders in the options market are betting there is plenty of steam left in the rally.
Spot gold, which touched a five-year low of $1,077 an ounce in July, is up about 8 percent from then and broke through its 200-day moving average last week, the first time since May.


Billionaire Paul Tudor Jones to Staff: Learn to Write or I’ll Rip Up Your Memo; A prominent hedge fund manager tells Bloomberg what business people can learn from journalism majors.
Sarah Grant – FT
Billionaire hedge fund manager Paul Tudor Jones has some surprising advice for people who want to succeed in business: Take a journalism class.

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