First Impressions

Uncoordinated: Why the world economy struggles
Jim Kharouf – John Lothian News

It wasn’t supposed to be this way.

Last November, I interviewed former British Prime Minister Gordon Brown about the state of the global economy and efforts he undertook during the financial crisis in 2008 and 2009. Among the goals set by Brown and others who made up the G-20 meeting in April 2009 were simply these: prevent a global depression, – check, implement global regulatory reforms – check for the most part and a growth pact among the leading economies – unchecked.

Hey, two out of three ain’t bad is it?

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Quote of the Day

“Absent a marked adverse change in the outlook for the economy, I think it is reasonable to expect a progression of similar moves, with the asset purchase program completely wound down by the fourth quarter of the year.”

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta in the story, “Fed’s Lockhart says taper on track, urges patience on rates”.

Lead Stories

How 2014’s upbeat story turned into a scary thriller
Ralph Atkins –
The story seemed so simple at the start of the year. Shares were rallying on optimism about a world economic recovery; US and German bond yields were widely expected to edge higher as the Federal Reserve tapered its asset purchases, or quantitative easing. Investors positioned accordingly.

**JK – Markets turning the spotlight on China and not in a good way.

The Many Ways to Pull Off a TARP
Michael Rapoport, Saabira Chaudhuri and Alan Zibel – MoneyBeat – WSJ
With a key deadline looming for banks that still haven’t repaid their government-bailout funds, dozens of affected banks are trying a grab-bag of approaches to cope.

**JK – Hard to believe we’re still talking TARP.

South Africa pleads for global coordination amid Fed backlash
Dominic O’Neill, Sid Verma – Euromoney magazine
South Africa’s finance minister Pravin Gordhan added his voice to the growing chorus of Bric policymakers sounding the alarm over the negative spillover effects of US monetary policy.

**JK – I did an interview with Gordon Brown back in November, where he said he pushed for a global coordination on monetary policy. On that advice, he was not successful. And so here we are.

Morning MoneyBeat: Don’t Forget About the Debt Ceiling
Steven Russolillo – MoneyBeat – WSJ
Lost in the emerging-market turmoil and the jittery U.S. stock markets is the fact that a fresh battle over the debt ceiling is brewing in the nation’s capital. Washington has not been a front-and-center issue for investors since last year’s government shutdown was resolved. But with the government expected to bump up against the borrowing limit on Friday, opinions are split on how this will play out and what the economic and market consequences will be.

**JK – Why worry, we still have 24 hours.

The ECB Divides Expert Opinion
Neelabh Chaturvedi – MoneyBeat – WSJ
Not to over-hype it or anything, but Thursday’s ECB meeting is certainly at the more exciting end of the scale.

Bank of England holds fire ahead of guidance revamp
The Bank of England kept its monetary policy unchanged on Thursday as it worked on a new plan to steer interest rate expectations after its previous one was overtaken by Britain’s strong economic recovery.

Central Banks

Fed’s Lockhart says taper on track, urges patience on rates
The U.S. Federal Reserve will probably keep steadily dialing back its asset purchases and wind them down completely by late 2014 but should be patient on raising interest rates, a top U.S. central banker said on Wednesday.

Pressing hawkish case, Fed’s Plosser wants sharper QE cuts
The U.S. Federal Reserve should wind down its bond purchases faster than planned and end it before mid-year, a hawkish Fed policymaker said on Wednesday, going a step further in his criticism of the stimulus.

U.S. bank leverage rules to include global revisions: Fed governor
A top U.S. bank regulator plans to tell lawmakers on Thursday that final leverage rules for U.S. banks will incorporate recent revisions to a global capital standard, which likely means tougher requirements for the institutions.

EU asks Britain to explain new ‘allowances’ in bankers’ pay
The European Commission has asked the Bank of England to explain how new allowances in British bankers’ pay comply with an EU bonus cap, an official at the bloc’s executive said, a new flashpoint of friction over the reach of financial control.

Boring Is Beautiful as Belka Seeks to Lull Market
Agnes Lovasz – Bloomberg
Poland’s central bank Governor Marek Belka is keeping mum about the future path of interest rates, seeking to prevent traders from prematurely betting on higher borrowing costs and squeezing the nascent economic recovery.

What to Expect From the ECB Meeting
Brian Blackstone – MoneyBeat – WSJ
The weakening in euro zone inflation last month was a surprise. But was it a game changer? This will likely be a central focus of the European Central Bank‘s deliberations on Thursday, and determine whether it reduces interest rates from current record lows, or stands pat and waits for additional evidence on inflation and the economy.


New York’s Top Financial Regulator Investigates Currency Trading
The business of trading currencies is in a state of flux as top executives leave and traders are suspended or fired in the face of investigations into potential manipulation of the $5 trillion-a-day foreign exchange market.

Hedge Funds Rework Currency Positions in Market Drop
John Detrixhe – Bloomberg
Traders who anticipated a year when riskier bets would pay off are overhauling their foreign-exchange positions after an emerging-markets rout led to the worst start to the year for currency funds since 2004.

Record surge in yuan trade may mask a darker truth
The record surge in cross-border yuan trade settlement may be glossing over an uncomfortable truth — arbitrage fund flows that seem to point to other factors at play.

Citi FX Chief To Exit: The Memo
MoneyBeat – WSJ
The man who helped Citigroup claw back ground lost to competitors in foreign exchange is exiting. Anil Prasad, the global head of foreign exchange and local markets, is departing for “other interests,” as we explain over on this story on

Currency Market Unsettled by Trader Exits on Lawsky Probe
Greg Farrell and Ambereen Choudhury – Bloomberg
The foreign-exchange trading business was in upheaval across Wall Street as senior executives resigned and others were fired amid an expanding probe of possible currency manipulation.

How the FX Fallout Has Spread
MoneyBeat – WSJ
It’s been another hectic 24 hours for those following the foreign-exchange business, with fallout rapidly spreading from global probes into potential currency-markets manipulation. Losing track of all the news? Here’s a quick rundown, in roughly chronological order.

‘Meaningful FX Run’ Hammers Ukraine’s Currency
MoneyBeat – WSJ
The decline of Ukraine’s currency, the hryvnia, which started as a trickle, has turned into a flood as the strain of weeks of violent anti-government protests throughout the country against President Viktor Yanukovych’s administration takes its toll.

Live Bitcoin Trading
Business Insider
The floor of the New York Stock Exchange has been pretty quiet for years now, most of the trades having moved onto servers in New Jersey. If you want real pit action, you need not travel very far: One block up Broad Street each Monday, the floor of the Bitcoin Center NYC comes alive with the shouts of traders exchanging bitcoin.

Most People Still Don’t Know What Bitcoin Is, and Don’t Care to Know
Paul Vigna – MoneyBeat – WSJ
Yes, the media jumped all over the bitcoin story last year, us included. High profile retailers like Overstock got on board. Ben Bernanke talked about it, and even the U.S. Congress showed interest, holding high-profile hearings. But if bitcoin is going to become the kind of mainstream product its biggest acolytes expect it to be, they’ve got a lot of work to do in boosting its profile.

Indexes & Index Products

Schwab rolls out 401(k) platform using exchange-traded funds
Charles Schwab Corp is taking broader aim at the retirement market with a new 401(k) platform that will allow participants to invest 100 percent of their plan in low-cost exchange-traded funds.


Sochi Gold Medal Will Be One Of The Largest In Olympic History, Here’s How Much It’s Worth
Anthony DeMarco – Forbes
It’ll be one of the biggest but not the most expensive. The 2014 Sochi Winter Olympics gold medal’s “podium value” clocks in at approximately $566, a 20% decline from the record $708 value for the gold medals presented at the London 2012 Summer Olympics.
Why the price decline? Are the Russians skimping? Not so fast. It actually has to do with the drop in gold and silver prices over the past two years, from its record highs of 2012.

**JB – One would assume they are priceless to the athletes.

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