First Impressions

London Update

By John J. Lothian

I am headed home from London early due to a medical emergency at home as my wife is in the hospital awaiting surgery for removal of her appendix. It is my time to be the supportive spouse, not the patient.

While I was here I enjoyed the conference and seeing my global friends and colleagues from around the industry. I received lots of great feedback and it gave me much to think about.

One thing I heard concerned my column about CME executive Kim Taylor and her battle with cancer. There was an initial reaction, I was told, among a handful of CME employees that I was invading Kim’s privacy by publishing the column I wrote. However, when told I had Kim’s blessing and permission to write the story, their response changed.

I rightly understand the power that comes with publishing this newsletter and the importance for using that power for good. When I heard about Kim’s health issues, I asked her assistant to see if Kim wanted me to write something. I would not have written something without her blessing.

It seemed to me that Kim’s friends and CME associates were taking a very public posture of support with the wristband campaign. Later they came up with the Laugh For Kim. I believe in the power of prayer to aid healing, and I readily recall “Laughter is the Best Medicine” with a hat tip to Reader’s Digest.

More importantly though, Kim is a friend, colleague and mentor to many in the industry. I asked about writing a story because I thought Kim would want to show the world her heart is as big as her laugh. I believed she would not stop being Kim and I was right.

It turns out, though, as I was told, that my story broke the news of Kim’s health issues to the CME employees. Because of the privacy issues, there was no internal memo. The JLN story was the memo.

I am pleased by the $23K raised for the Lisa Fund following the publication of my column, especially for all the support from around the industry in honor of Kim. One competitor of the CME’s donated $3K to the Lisa Fund. A greater good was created by Kim’s courage and leadership, and the support of her friends.

Quote of the Day

“She would do better if she was less angry and demonized less. I believe in ‘hate the sin, and love the sinner.'”

Warren Buffett on Sen. Elizabeth Warren in the story, “Jamie Dimon Says He’s Unsure If Elizabeth Warren Understands Global Banking System”

Lead Stories

Jamie Dimon Says He’s Unsure If Elizabeth Warren Understands Global Banking System
By Kim Chipman – Bloomberg
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon took aim at U.S. Senator Elizabeth Warren, a critic of large banks, as he expressed broad concerns about leadership in Washington.
“I don’t know if she fully understands the global banking system,” Dimon, speaking Wednesday at an event in Chicago, said of the Massachusetts Democrat. Still, he said he agrees with some of her concerns about risks.

Bond Investors Are Getting Really Creative When it Comes to Hedging Their Risk
By Tracy Alloway – Bloomberg
What do you get the credit investor who has everything? How about an effective hedge against a major blow-up in bonds?

View of Wall Street Still Suffering Despite Economy, Survey Says
By Stephanie Yang – WSJ
Several years into the economy’s post-crisis mend, Wall Street’s reputation is still lagging behind a full recovery. Financial institutions have grown increasingly concerned about public perception and trust, according a study by communications firm Makovsky. The results come as many continue to face costly legal battles and lingering backlash from the financial crisis.

The $3 Trillion Bond Trade Citigroup Says Investors Should Fear
By Nabila Ahmed and Sonali Basak – Bloomberg
For all the concern that Wall Street’s shrinking balance sheets will fuel a liquidity crisis when investors flee credit markets, Citigroup Inc. strategist Stephen Antczak says investors may be overlooking an even bigger catalyst.
The size of the U.S. corporate-bond market has ballooned by $3.7 trillion during the past decade, yet almost all of that growth is concentrated in the hands of three types of buyers: mutual funds, foreign investors and insurance companies, according to Citigroup.

Making Sense of Cleared Swaps: New Regulations and Compliance
July 23 | 9:00 a.m.- 5:00 p.m. | NFA, Chicago
This one-day course is designed to cover key features of OTC swap contracts, new Dodd Frank regulations and compliance requirements for swaps markets participants. The educational program explores the world of swaps by taking a closer look at two of the most popular swaps— interest rate swaps (IRS) and credit default swaps (CDS) — and how financial institutions and corporates use swaps in their portfolio management strategies. In addition, the program looks at how swaps differ from listed derivatives and the changing landscape with a migration to the CCP model.

Ex-NYSE head among trading veterans backing blockchain start-up
By Nicole Bullock – FT
The former head of the New York Stock Exchange is among veteran trading executives who are backing a start-up that aims to use the type of technology that underpins bitcoin for securities issuance and trading. Duncan Niederauer, the previous chief executive of NYSE, is part of a group that has produced $1.25m of seed money for Symbiont. The other members are Matt Andresen, trading head at Citadel who founded the Island ECN, and Getco founders Dan Tierney and Stephen Schuler.

Britain Expects Initial Losses as It Prepares to Sell Its R.B.S. Stake
By Chad Bray – NY Times
The British government is ready to exit the banking business, even if it means that it will record a loss on some of its holdings.
George Osborne, the chancellor of the Exchequer, said in a speech here on Wednesday night that the government would begin to sell down the 80 percent stake that it holds in the Royal Bank of Scotland.

Big Banks Can’t Will This Risk Away; Regulators face pressure to tighten the screws on the living wills of big banks.
By John Carney – WSJ
The biggest U.S. banks may soon face a test of willpower. Banks have until July 1 to submit “living wills” to regulators. These are plans describing how they could be resolved in the event of failure.

Deutsche Official Played Down Rigging
A Deutsche Bank AG executive whose employees have been accused of rigging interest rates told a British trade group in 2008 that such manipulation was nothing more than a “conspiracy theory,” a London court heard Tuesday.

Central Banks

World Bank sees slower global growth, urges Fed to wait on rates
By Anna Yukhananov – Reuters
The World Bank on Wednesday cut its global growth outlook for this year and urged countries to “fasten their seat belts” as they adjust to lower commodity prices and a looming rise in U.S. interest rates.
Kaushik Basu, the World Bank’s chief economist, said the Federal Reserve should hold off on a rate hike until next year to avoid worsening exchange rate volatility and crimping global growth.

Janet Yellen Isn’t Worrying About Your Personal Inflation Rate
By Ben Steverman – Bloomberg
To judge by government data, there’s essentially no inflation in the U.S. economy. The latest Consumer Price Index actually shows a 0.2 percent drop in prices from April 2014.
Just try telling that to millions of renters who have seen their monthly rent checks rise 3.5 percent, on average, over the past year. Families shouldering college tuition payments or child care expenses, up 3.7 percent from last year, will also find the notion of an inflation-free economy hard to accept.

Pimco expects U.S. Fed to begin raising rates in September
By Jennifer Ablan – Reuters
Pimco expects the U.S. Federal Reserve to begin raising interest rates later this summer, most likely in September, which could be the start of a multiyear normalization process, the firm’s chief investment officer of U.S. core strategies said on Wednesday.

RBI proposes cap on global R-denominated bond yield
The Financial Express
The Reserve Bank of India (RBI) has proposed that companies eligible for borrowing foreign exchange loans may issue rupee-denominated bonds in the overseas market.

CSRC’s Xiao Gang on major reforms to deepen capital markets in China
China Securities Regulatory Commission chairman Xiao Gang speaks about efforts to comprehensively reform the operation of China’s capital markets


Citigroup’s FX deals might have made only $1 million but cost $2.5 billion
By David Henry – Reuters
Employee misconduct in foreign exchange trading that cost Citigroup Inc $2.5 billion in fines and penalties might have made only $1 million for the bank, an executive said on Wednesday.

Falling yen raises spectre of ‘currency war’ in Asia
By Vidya Ranganathan – Reuters
From South Korea to Indonesia and India, monetary authorities are preparing to let their currencies weaken as a falling Japanese yen makes their economies uncompetitive, and drags them into what some policymakers are calling a “currency war”.
The Indonesian rupiah, Malaysian ringgit, Thai baht and other currencies had been sliding gradually against a broadly strong U.S. dollar this year.

Greece crisis sees Swiss franc eclipse yen as top safe-haven
By Anirban Nag – Reuters
The Swiss franc has emerged as a big winner from Greece’s debt problems, overtaking the Japanese yen as investors’ favourite safe-haven currency despite Switzerland offering the world’s lowest interest rates.

Direxion Investments Launches First Currency Hedged 2X Leveraged ETFs
Press Release
Direxion Investments announces the launch of two new leveraged exchange-traded funds (ETFs).
The Direxion Daily MSCI Europe Currency Hedged Bull 2X Shares (Ticker: HEGE) seeks to achieve 200% of the daily performance of the MSCI Europe U.S. Dollar Hedged Index. The index represents a close estimation of the performance that can be achieved by hedging the currency exposures of its parent index, the MSCI Europe Index, to the U.S. dollar, the “home” currency for the hedged index. The Direxion Daily MSCI Japan Currency Hedged Bull 2X Shares (Ticker: HEGJ) seeks to achieve 200% of the daily performance of the MSCI Japan U.S. Dollar Hedged Index. The index represents a close estimation of the performance that can be achieved by hedging the currency exposures of its parent index, the MSCI Japan Index, to the U.S. dollar, the “home” currency for the hedged index.

MasterCard Slams Bitcoin In Letter To UK Officials
By Laura Brodbeck – Benzinga
Bitcoin has been praised for its ability to facilitate transactions quickly and easily to users across claims that once bitcoin is subjected to the same regulations that financial institutions and credit cards face, the benefits of using the cryptocurrency will be few and far between.

Hyperinflation Fires Up Bitcoin Adoption in Venezuela
By By Gola Yashu – NEWSBTC
The ongoing hyperinflation in Venezuelan markets is reportedly causing an increase in Bitcoin adoption, according to the Panam Post.

Indexes & Index Products

Indicator of the Week: Debunking Dow Theory
By Rocky White – Schaeffer’s Research
With transportation stocks doing so poorly this year, Dow Theory is a hot topic right now. The basic idea is that transportation stocks are a good indicator for the market going forward. The logic behind it is pretty simple. If companies are doing well and shipping a lot of products, then the companies shipping the products should be doing well, too. When the shipping companies begin to fall, it means the rest of the economy could be close behind.

Financial Products News #2015
Effective after the close of business on Friday, June 19, 2015, Nasdaq will cease the calculation and dissemination of the following two indexes:
NASDAQ OMX Green Economy Capped IndexSM (Symbol: QGREENCP4)
NASDAQ OMX Green Economy Capped Total Return IndexSM (Symbol: QGREENCP4X)

China Shrugs at MSCI Exclusion
By Yifan Xie, Chao Deng and Dominique Fong – WSJ
As China awakes to find its stock markets still not ready to be included in the world’s major equity indexes, few within the country expressed surprise and most reacted with a quiet shrug.

China MSCI inclusion is inevitable but not imminent
By Josh Noble – FT
Mainland China’s grand entrance to the global equity club may have been delayed for now, but its membership papers are already being drawn up.

5 Things to Know About MSCI Considering Inclusion of Chinese A-Shares in Its Benchmarks
By Gregory Stuart Hunter – WSJ
Index provider MSCI will decide next week (after U.S. markets close Tuesday) whether to include Chinese domestic equities, known as A-shares, in its global benchmarks. Here are five things to know about what this means for global investors.

S&P 500 at Smallest Price Range in 20 Years
By Joseph Ciolli – Bloomberg
A deer in headlights is stuck in place and too overwhelmed to act. So too are stock investors as they await action from the Federal Reserve.


ETF Securities Precious Metals Monthly – May 2015
Led by silver, divergent strength remains the 2015 story in the precious metals (PMs) market. Divergent, because gold and silver have remained resilient in an environment that many analysts would consider bearish.

Antioquia Gold Announces Decision to Proceed with Underground Gold Mine at Cisneros Project and Stock Option Grant
Press Release – MarketWatch
Antioquia Gold Inc. is pleased to announce that it intends to proceed with the development and construction of a 500 tpd underground gold mine at its Cisneros Project near Medellin, Colombia.

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