First Impressions

The 2015 Managed Futures Pinnacle Award Winners, from CME and BarclayHedge, were held last night. Here are the winners.

2014 Best Emerging CTA
Ebullio Capital Management

Best Options Strategy
Doherty Advisors LLC

5-year Best Options Strategy
Global Sigma Group

Best Multi-advisor Futures Fund
AC Investment Management

5-year Best Multi-advisor Futures Fund
Abbey Capital Limited

2014 Best Single Sector CTA
Tanyard Creek Capital

5-year Best Single Sector CTA
Kottke Commodity Capital

3-year Best Hybrid CTA
Esulep Management

3-year Best Discretionary CTA
H20 AM

3-year Best Systematic CTA
Mondiale Asset Management

2014 Best Diversified CTA ($500 Million + AUM)
Two Sigma

2014 Best Diversified CTA (Less than $500 Million AUM)
Quantmetrics Capital Management

5-year Best Diversified CTA ($500 Million + AUM)

5-year Best Diversified CTA (Less than $500 Million AUM)
Mondiale Asset Management

Pinnacle Achievement Award
Cliff Asness, Managing and Founding Principal, AQR Capital Management

Quote of the Day

“That was like a Little Leaguer hitting a home run in a way — they just happened to have a great quarter. It’s a nice little model but it’s not any better than what we do.”

Ethan Harris, co-head of global economics at Bank of America Merrill Lynch, talking about the Fed’s tracker in the story, “Wall Street vs. the Fed: Who’s right?”

Lead Stories

Inside Wall Street’s Most Enduring Rivalry; The CEOs of Goldman Sachs and Morgan Stanley are leading their firms in opposite directions.
Michael J Moore – Bloomberg Business
One grew up in Brooklyn public housing, the son of a postal worker, and shared a bedroom with his grandmother. The other was born half a world away, in Australia, the son of an engineer and the sixth of 10 children in a comfortable Melbourne household.

U.S. First-Quarter GDP Slowdown Less Severe than Previously Estimated
Eric Morath – WSJ
The economic slowdown early this year was less severe than previously estimated, raising expectations for stronger growth later in 2015.
Gross domestic product, the broadest sum of goods and services produced across the economy, contracted at a 0.2% seasonally adjusted annual rate in the first quarter, the Commerce Department said Wednesday. The latest figure matched economists’ forecasts. The agency previously estimated output fell 0.7% from January through March.

Wall Street vs. the Fed: Who’s right?
Patrick Gillespie – CNN
Wall Street is just more optimistic than the Federal Reserve.
The Atlanta Fed projects the economy will grow 2% in the second quarter. But Barclays economist Jesse Hurwtiz is predicting 3%, Bank of America Merrill Lynch economists forecast 2.5%, and other big banks’ estimates hew closer to theirs.
Why the gap?

Banks Caught Between Immovable Interest Rates And Irresistible Compliance
John Carney – WSJ
It looks ever more likely that when the Federal Reserve starts raising interest rates, the pace will be slow and uneven. So the chances banks will see net interest margins improve quickly are slimmer. The result: banks have focused on cost cutting to improve performance. Yet that too looks ever more challenging given banks are still having trouble meeting regulatory requirements. Witness last week’s reprimand of six banks by the Office of Comptroller of the Currency over mortgage servicing.

Hedge Fund ‘War Games’ in Monaco Predict No Greek Euro Exit
Will Wainewright – Bloomberg
Hedge-fund managers and investors expect Greece to remain in the euro area after they “war-gamed” the crisis in a 90-minute role-playing exercise at an industry conference in Monaco.

China treasury bond auction failure raises concerns on debt plan
Gabriel Wildau – FT
China’s finance ministry failed to sell out a bond auction on Wednesday for the first time in nearly a year, raising concerns about whether the market can absorb the huge wave of government paper coming this year.

Some U.S. repos not aligned to new process: New York Fed
Richard Leong – Reuters
Some tri-party repurchase agreements are still not complying with the new settlement process intended to avert a repeat of the market turmoil due to the collapse of Lehman Brothers, according to the New York Federal Reserve on Wednesday.

U.S. Bancorp unit to pay $44.5 mln in Peregrine settlement
Dena Aubin – Reuters
A unit of Minneapolis-based U.S. Bancorp has agreed to pay $44.5 million to settle a class action brought by former customers of brokerage Peregrine Financial Group, which failed in 2012 after its funds were siphoned off in a long-running fraud.

LiquidityEdge Wants to Help Little Guy in U.S. Treasuries Market
Matthew Leising – Bloomberg
A new market for trading U.S. Treasuries says it’s looking out for the little guy in the $12.6 trillion business.

As U.S. Probes $12.7 Trillion Treasury Market, Trader Talk Is a Good Place to Start
Alexandra Scaggs, Daniel Kruger and Keri Geiger – Bloomberg
The U.S. federal probe that ended last month with guilty pleas and $6 billion in fines from global banks began with an open secret — that currency traders there could talk to each other to coordinate trades.

The Shocking Truth Mutual Funds Don’t Want You To Know
Ky Trang Ho – Forbes
The vast majority of mutual funds have more in common with one-hit wonders than they would want you to know. The shocking truth is that most mutual funds that rank in the top performance quartile one year don’t do it again the next year nor the following year. And no funds stay in the top quartile over five years. Even worse, about a third of mutual funds die or get merged with another after five years.

How ultralow interest rates could devastate pension funds, insurers
William Watts – MarketWatch
Here’s another warning that prolonged, ultralow interest rates could eventually devastate pension funds and life insurers.

Central Banks

Fed Stands Firm Against Revealing Bank Stress-Test Model
Victoria McGrane – WSJ
Federal Reserve officials aren’t changing their minds about revealing the models that lie at the heart of their stress tests of the nation’s biggest banks.

BOJ’s 2015 Stimulus Reluctance Spurs Debate Over Tapering
Toru Fujioka and Masahiro Hidaka – Bloomberg
With its reluctance to add to record monetary stimulus even as inflation remains well below its target, the Bank of Japan has stoked speculation about it scaling back its asset purchases as soon as early 2016.

ECB’s Knot says central bank easing is reaching its limits
Leigh Thomas – Reuters
Central bank easing of monetary policy has gone about as far as it can without running the risk of creating financial market bubbles, ECB governing council member Klaas Knot said on Wednesday.

Federal Reserve Vice Chairman Stanley Fischer At The Riksbank Macroprudential Conference, Stockholm, Sweden June 24, 2015, Supervisory Stress Testing Of Large Systemic Financial Institutions
Press Release – Mondovisione
It’s a pleasure to take part in the Riksbank Macroprudential Conference and I thank the organizers for inviting me to participate in the conference, and particularly in this panel on stress testing.
Stress testing has become a cornerstone of a new approach to regulation and supervision of the largest financial institutions in the United States. The Federal Reserve’s first supervisory stress test was the Supervisory Capital Assessment Program, known as the SCAP. Conducted in 2009 during the depths of the financial crisis, the SCAP marked the first time the U.S. bank regulatory agencies had conducted a supervisory stress test simultaneously across the largest banking firms. The results clearly demonstrated the value of simultaneous, forward-looking supervisory assessments of capital adequacy under stressed conditions. The SCAP was also a key contributor to the relatively rapid restoration of the financial health of the U.S. banking system.

Janet Yellen Is Far Too Confused To Plan A Stock-Market Rally
John Tamny – Forbes
It’s said that the Federal Reserve frequently speaks to the public through reporters at major newspapers like the Wall Street Journal, and the Journal’s Greg Ip is surely one of those reporters. In a column last week Ip, ever sympathetic to the Fed’s way of thinking, described what he and Fed Chairman Janet Yellen see as the central bank’s major problem:
“…moving too early [to raise interest rates] will derail the recovery, while moving too late will cause inflation to overshoot.”

China likely to get central bank nod for yuan gold fix soon -sources
A. Ananthalakshmi – Reuters
China is expected to receive approval from its central bank for a yuan-denominated gold fix “anytime now”, with more details about the scheme potentially set to emerge at a major industry conference this week, sources told Reuters.

Ukraine’s central bank wants businesses to extend terms of foreign debt
Natalia Zinets – Reuters
Ukraine’s central bank has urged businesses to negotiate maturity extensions on their foreign debt in order to curb foreign currency demand on the local market and ease pressure on the national hryvnia currency.


Cash Is No Longer King—and Never Should Be
Jim Cahn –
Are you one of the millions of investors holding larger than normal amounts of cash for safety?
With the 10-year Treasury rate spending most of their time below 3% over the last four years (and less than 2% from April 2012 to May 2013) keeping the bulk of your savings in cash may be not the safe harbor you think it is.

Remember euro/dollar parity talk? It’s back
Dhara Ranasinghe – CNBC
The prospect of a U.S. rate rise is coming back into focus for forex markets, putting a fall in the euro to parity versus the dollar back on the cards, some analysts say.

The euro’s relationship with the bund has hit the rocks
Joseph Adinolfi – MarketWatch
The euro has been taking its cues from the 10-year bund yield since its decline against the dollar began accelerating last summer.
But over the past month or so, the correlation has begun to unravel, and this unraveling has grown more pronounced in recent weeks.

Emerging-market forex reserves slip, raising risks
Carolyn Cui – MarketWatch
Central banks in emerging markets are running down their foreign-currency reserves at the fastest pace since the financial crisis, reducing some countries’ capacity to weather potential shocks, such as a rate increase in the U.S.

Grexit Threat Doesn’t Rattle FX Traders
Dean Popplewell – Forbes
The euro edged up a smidgen on the U.S. dollar (EUR1.1200) on Wednesday. The greenback’s latest rally receded following the lift it got the day before from encouraging U.S. data, and comments from Federal Reserve Governor James Powell who predicted the Fed will raise rates not once, but twice this year.
Investors would be hard pressed not to find the current trading environment a challenge given the tight trading ranges. Intraday price movements among the various asset classes — commodities, equities, fixed income and currencies — have either been very profitable or costly to many.

Nasdaq Selects Bitcoin Startup Chain To Run Pilot In Private Market Arm
Laura Shin – Forbes
Nasdaq OMX Group Inc. has named San Francisco-based startup Chain as its partner for a pilot, announced in May, to test Bitcoin technology for the trading of shares in private companies.

Indexes & Index Products

Japan Exchange Group to launch Mothers Index futures in mid-2016
Shinichi Saoshiro – Reuters
The Japan Exchange Group said on Wednesday it will launch futures trading for the Mothers Index in mid-2016.

China’s MSCI inclusion to drive Hong Kong market
Drew Wilson – Portfolio Adviser
“That sounds large but against the backdrop of $240bn in daily turnover on the A-share market, $50bn is only a few hours of turnover,” Zhu said at the firm’s China briefing in Hong Kong.
However, as China’s weighting on the index goes up incrementally and underweight widens accordingly, fund managers will make up the A-share shortfall by allocating to Hong Kong, she said.
The Hong Kong market still only trades about $10bn per day versus $240bn per day for A-shares.

Etisalat inclusion in MSCI index possible this year after opening up to foreign ownership
John Everington – The National
Etisalat could be included in the influential MSCI Emerging Markets Index as early as August after the UAE’s biggest listed company was opened up to foreign investment.
The Federal Government’s decision to allow foreign investors to own its shares sent the stock soaring 15 per cent yesterday – the maximum allowed in a single trading session and the biggest one-day gain for the telecoms company in a decade.

Lion Biotechnologies to Join Russell Global Index Nasdaq:LBIO
Lion Biotechnologies, Inc. (Nasdaq:LBIO), a biotechnology company that is developing novel cancer immunotherapies based on tumor-infiltrating lymphocytes (TIL), today announced that it will join the Russell Global Index on June 26, according to a list of final additions posted June 19 on the FTSE Russell website.

Nikkei hits 18-year high, breaches peak reached in 2000
Hideyuki Sano – Reuters
Japan’s Nikkei share average rose 0.4 percent in morning trade on Wednesday, surpassing its peak hit in 2000 to reach its highest level since 1997.


Green shoots emerge in withered gold mining sector
Nicole Mordant – Reuters
The global gold mining industry is showing signs of life as merger activity picks up and industry veterans set up new companies and hunt for projects, taking advantage of weak prices to lay the groundwork for a rebound.

Indians Buy Gold as Chinese Shift to Stocks; New Delhi removes bottlenecks in market; Shanghai rally encourages investment in shares
Biman Mukherji and Alice Kantor – WSJ
The rapid run-up in Chinese shares this year is dimming the allure of another popular investment: gold. Luckily for fans of the metal, demand is looking healthy in India, the other big retail market in Asia.

The Forgotten History (and Potential Future) of Silver as Money
Stefan Gleason –
In contemporary discussions of sound money, silver tends to get short shrift. Even among staunch sound money advocates, the historic role of silver as money is often marginalized or ignored altogether.

Isis claims to mint gold and silver coins for currency free from ‘satanic’ global economy
Lizzie Dearden – The Independent
Isis claims it is ready to start issuing its own currency in the form of gold and silver coins for use in its “caliphate”.

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