First Impressions

Today we released the second of our MarketsWiki Education Intern Series Chicago 2014 videos. In this one, R.J. O’Brien’s Matthew Rees says to consider the human element amid the technology revolution.

Matthew Rees, R.J. O’Brien – Three Old Words For New Generations of Futures Trading

JohnLothianNews.com

Matthew Rees, chief relationship officer of R.J. O’Brien & Associates, discusses a different perspective of technology, and the importance of keeping the human element when building and maintaining relationships with customers. Rees mentions how there is a “sweet spot” when utilizing new communication tools and staying connected to the “traditional world”. He also gives a warning about how new technology could inadvertently isolate customers.

Watch the video »

Quote of the Day

In cycling, the peloton is usually led and controlled by the strongest and largest teams, It’s the same with the global monetary peloton where the easy policy stance of the Group of Three central banks sets the pace for the entire group.

Morgan Stanley economist Joachim Fels, as quoted in the Bloomberg story “Don’t Hike Alone Is Jackson Hole Bear Warning for Central Banks”

Lead Stories

Junk Bonds Return to Favor as Risk Gauge Shows Confidence
Sridhar Natarajan – Bloomberg
The junk-bond market, which was rattled last month by its biggest slump in more than a year, is poised to recover its losses as demand resurfaces for riskier assets.
jlne.ws/1o8HFcz

***DA: Risk on again.

Pimco Scoops Up Quality Junk Cast Off in High-Yield Fund Exodus
Benjamin Purvis – Bloomberg
Pacific Investment Management Co. (PCARX) has been snapping up some of the higher-rated junk bonds dumped by speculative-grade debt managers amid the recent exodus from funds.
In their rush to meet redemptions, high-yield money managers picked the wrong assets to sell and created pricing that’s “quite attractive” for some instruments rated just below investment grade, Mark Kiesel, Pimco’s global head of corporate bond portfolio management, said at a media briefing in Sydney today.
jlne.ws/1rSXJmh

***DA: “Quality junk” makes me picture old reruns of “Sanford and Son.”

Fed Economists Criticize SEC Money-Fund Restrictions
Andrew Ackerman – MoneyBeat – WSJ
Federal policy makers are warning a central plank in the Securities and Exchange Commission’s plan to rein in risks posed by the $2.6 trillion money-market mutual-fund industry will inadvertently encourage investor stampedes rather than quell them.
jlne.ws/1uR75nq

***DA: Telling investors that they will not be able to access their money when they need it most is no way to boost confidence.

Don’t Hike Alone Is Jackson Hole Bear Warning for Central Banks
Simon Kennedy – Bloomberg
“Hiking alone is not recommended” goes the warning to walkers in Wyoming’s Grand Teton National Park. Central bankers should perhaps heed the same advice when it comes to interest rates as they fly this week to the Tetons and their annual symposium on monetary policy in Jackson Hole. Currency bulls rather than grizzly bears are the reason there is safety in numbers for them.
jlne.ws/1o8KKtg

When Packing for Jackson Hole, Include These Economic Reports
Kathleen Madigan – MoneyBeat – WSJ
As central bankers, economists, finance ministers and other officials from around the globe get set to gather at Jackson Hole, Wyo., this coming Thursday, the world’s largest economy is coming off the best six-month run of job gains since early 2006.
jlne.ws/1uR6W3B

***DA: Depending on the outcome, better remember to pack aspirin as well.

Central Banks

U.S. lawmakers slam Fed’s crisis lending proposal
Reuters
A bipartisan group of U.S. lawmakers on Monday urged the Federal Reserve to restrict its crisis lending programs for big banks, which were criticized as bailouts during the 2007-2009 meltdown.
jlne.ws/1o8Jg2i

At Jackson Hole, Central Banks Moving in Different Directions
Paul Vigna – MoneyBeat – WSJ
WSJ’s Jon Hilsenrath joined the MoneyBeat show this morning with his preview of the Jackson Hole confab, and touched on the big question: will the Fed wait too long to raise rates?
jlne.ws/1uR73vK

***DA: Our new rallying cry: “Remember the peloton!”

The Fed’s regimen will not remedy Europe’s ills
Philipp Hildebrand – Financial Times
Once again, these are gloomy days for the eurozone. The yield on German 10-year government debt dipped below 1 per cent for the first time last week, signalling that investors expect growth to remain anaemic and leading to calls for the European Central Bank to start a full-blown quantitative easing programme, buying government bonds.
jlne.ws/1AuxsQs

***DA: QEuro.

Philippines Cuts Interest Costs on 10-Year Bond Exchange
Ditas Lopez and Cecilia Yap – Bloomberg
The Philippines priced 140 billion pesos ($3.2 billion) of 10-year bonds in its first debt exchange in three years, allowing the nation to cut interest payments and set the stage for sustained economic growth.
jlne.ws/1o8GKJn

Currencies

Renminbi fights back as PBoC intervention subsides
Gabriel Wildau in Shanghai – Financial Times
After a historically weak start to the year, China’s renminbi has stormed back in recent months as tactical intervention by the central bank has subsided, allowing market forces to reassert themselves.
jlne.ws/1AuxoAg

***DA: Who are you calling a currency manipulator?

Crisis Offered ‘Baptism’ for Some Home-Currency Debt, S.F. Fed Finds – Real Time Economics
Ben Leubsdorf – WSJ
Almost all international debt is issued in major global currencies such as the U.S. dollar and the euro, but the financial crisis of 2007-2009 provided an opening for a handful of smaller currencies to gain ground, according to a new analysis from the Federal Reserve Bank of San Francisco.
jlne.ws/1o8KwCp

***DA: Another currency called “gold” has enjoyed renewed popularity as well.

Ex-Rabobank Employee Pleads Guilty in Libor-Rigging Probe
Erik Larson and Bob Van Voris – Bloomberg
A former Rabobank Groep senior trader pleaded guilty in New York to conspiring to manipulate a benchmark interest rate tied to trillions of dollars of securities to benefit his trading positions, the U.S. said.
Paul Robson, who worked at Rabobank’s London office and made the bank’s yen Libor submissions, pleaded guilty to a single conspiracy count in Manhattan federal court yesterday, the Justice Department said in a statement. The ex-trader is scheduled to be sentenced in 2017, the U.S. said.
jlne.ws/1rT4sg5

Bitcoin slumps $120, but does anyone care?
Katie Holliday – CNBC
The price of bitcoin plunged $120 over the past week, and one analyst told CNBC the crypto currency will fall further as it becomes less sensitive to ‘good news.’
jlne.ws/1o8Gwln

***DA: Yesterday’s news.

Indexes & Index Products

New type of ETF promises to shrink spreads
Yakob Peterseil – Risk.net
With the launch of their ‘international’ range of ETFs, iShares and Euroclear are creating a new type of ETF issuance inside an established structure. If their hopes pan out, all ETFs will look like this three to five years from now.
jlne.ws/1pWDmFj

Missing MBS in Bond Indexes Distort Funds, Citigroup Says
Jody Shenn – BloombergBusinessweek
After years of using purchases of U.S. government-backed mortgage securities as a stimulus tool, the Federal Reserve owns almost a third of the debt outstanding.
One rarely discussed consequence: Money managers are being pushed to add more of the securities than they otherwise might because the benchmark debt indexes that they’re judged against fail to exclude the Fed’s sizable holdings, according to Citigroup Inc. (C:US) analysts.
jlne.ws/1uSmfZE

NASDAQ OMX Lists First Trust Strategic Income ETF
CNN Money
FDIV seeks a high level of risk-adjusted income and diversification through the use of multiple asset classes, targeted investment strategies and specialized management teams. By tactically blending multiple investment strategies, which includes both fixed-income investments and income-producing equity securities, the Fund may provide a lower risk, total return alternative to focusing solely on one strategy. This approach focuses on providing risk-adjusted income and cap
jlne.ws/1w5dux2

It’s Fundamental: Year-to-Date Performance of Russell’s Fundamentally Weighted Indexes Relative to Russell’s Market Cap Weighted Indexes Tracking U.S. Small- and Large-Cap Stocks Help Illustrate Potential Benefits of Diversified Index Approaches
Press Release (via MarketWired)
jlne.ws/1uSmDYa

Sifma’s Municipal Swap Index to Use Only Data Reported to MSRB
Bloomberg
The Sifma Municipal Swap Index starting tomorrow will generate its weekly benchmark calculations using only data that has been reported to the Municipal Securities Rulemaking Board.
jlne.ws/1rSY20u

Gold

Countries With Largest Gold Reserves
Elena Holodny – Business Insider
Central banks purchased 118 tonnes in net gold in Q2 2014, representing a 28% year-over-year increase, according to The World Gold Council.
In May 2014, the European Central Bank and other European central banks signed the fourth Central Bank Gold Agreement (CBGA). The agreement says the central banks “currently do not have plans to sell significant amounts of gold,” and that it will last for five years starting in the end of September 2014.
jlne.ws/1uSlMGM

***DA: BI put out the top ten list, but most interesting to me is #12, Turkey, which has been aggressively purchasing of late, and Brazil, which made its first purchase in over 10 years.

FirstRand Lists Gold Bond On JSE
jlne.ws/1AuyuMu

First Impressions

Today we released the second of our MarketsWiki Education Intern Series Chicago 2014 videos. In this one, R.J. O’Brien’s Matthew Rees says to consider the human element amid the technology revolution.

Matthew Rees, R.J. O’Brien – Three Old Words For New Generations of Futures Trading

JohnLothianNews.com

Matthew Rees, chief relationship officer of R.J. O’Brien & Associates, discusses a different perspective of technology, and the importance of keeping the human element when building and maintaining relationships with customers. Rees mentions how there is a “sweet spot” when utilizing new communication tools and staying connected to the “traditional world”. He also gives a warning about how new technology could inadvertently isolate customers.

Watch the video »

Quote of the Day

In cycling, the peloton is usually led and controlled by the strongest and largest teams, It’s the same with the global monetary peloton where the easy policy stance of the Group of Three central banks sets the pace for the entire group.

Morgan Stanley economist Joachim Fels, as quoted in the Bloomberg story “Don’t Hike Alone Is Jackson Hole Bear Warning for Central Banks”

Lead Stories

Junk Bonds Return to Favor as Risk Gauge Shows Confidence
Sridhar Natarajan – Bloomberg
The junk-bond market, which was rattled last month by its biggest slump in more than a year, is poised to recover its losses as demand resurfaces for riskier assets.
jlne.ws/1o8HFcz

***DA: Risk on again.

Pimco Scoops Up Quality Junk Cast Off in High-Yield Fund Exodus
Benjamin Purvis – Bloomberg
Pacific Investment Management Co. (PCARX) has been snapping up some of the higher-rated junk bonds dumped by speculative-grade debt managers amid the recent exodus from funds.
In their rush to meet redemptions, high-yield money managers picked the wrong assets to sell and created pricing that’s “quite attractive” for some instruments rated just below investment grade, Mark Kiesel, Pimco’s global head of corporate bond portfolio management, said at a media briefing in Sydney today.
jlne.ws/1rSXJmh

***DA: “Quality junk” makes me picture old reruns of “Sanford and Son.”

Fed Economists Criticize SEC Money-Fund Restrictions
Andrew Ackerman – MoneyBeat – WSJ
Federal policy makers are warning a central plank in the Securities and Exchange Commission’s plan to rein in risks posed by the $2.6 trillion money-market mutual-fund industry will inadvertently encourage investor stampedes rather than quell them.
jlne.ws/1uR75nq

***DA: Telling investors that they will not be able to access their money when they need it most is no way to boost confidence.

Don’t Hike Alone Is Jackson Hole Bear Warning for Central Banks
Simon Kennedy – Bloomberg
“Hiking alone is not recommended” goes the warning to walkers in Wyoming’s Grand Teton National Park. Central bankers should perhaps heed the same advice when it comes to interest rates as they fly this week to the Tetons and their annual symposium on monetary policy in Jackson Hole. Currency bulls rather than grizzly bears are the reason there is safety in numbers for them.
jlne.ws/1o8KKtg

When Packing for Jackson Hole, Include These Economic Reports
Kathleen Madigan – MoneyBeat – WSJ
As central bankers, economists, finance ministers and other officials from around the globe get set to gather at Jackson Hole, Wyo., this coming Thursday, the world’s largest economy is coming off the best six-month run of job gains since early 2006.
jlne.ws/1uR6W3B

***DA: Depending on the outcome, better remember to pack aspirin as well.

Central Banks

U.S. lawmakers slam Fed’s crisis lending proposal
Reuters
A bipartisan group of U.S. lawmakers on Monday urged the Federal Reserve to restrict its crisis lending programs for big banks, which were criticized as bailouts during the 2007-2009 meltdown.
jlne.ws/1o8Jg2i

At Jackson Hole, Central Banks Moving in Different Directions
Paul Vigna – MoneyBeat – WSJ
WSJ’s Jon Hilsenrath joined the MoneyBeat show this morning with his preview of the Jackson Hole confab, and touched on the big question: will the Fed wait too long to raise rates?
jlne.ws/1uR73vK

***DA: Our new rallying cry: “Remember the peloton!”

The Fed’s regimen will not remedy Europe’s ills
Philipp Hildebrand – Financial Times
Once again, these are gloomy days for the eurozone. The yield on German 10-year government debt dipped below 1 per cent for the first time last week, signalling that investors expect growth to remain anaemic and leading to calls for the European Central Bank to start a full-blown quantitative easing programme, buying government bonds.
jlne.ws/1AuxsQs

***DA: QEuro.

Philippines Cuts Interest Costs on 10-Year Bond Exchange
Ditas Lopez and Cecilia Yap – Bloomberg
The Philippines priced 140 billion pesos ($3.2 billion) of 10-year bonds in its first debt exchange in three years, allowing the nation to cut interest payments and set the stage for sustained economic growth.
jlne.ws/1o8GKJn

Currencies

Renminbi fights back as PBoC intervention subsides
Gabriel Wildau in Shanghai – Financial Times
After a historically weak start to the year, China’s renminbi has stormed back in recent months as tactical intervention by the central bank has subsided, allowing market forces to reassert themselves.
jlne.ws/1AuxoAg

***DA: Who are you calling a currency manipulator?

Crisis Offered ‘Baptism’ for Some Home-Currency Debt, S.F. Fed Finds – Real Time Economics
Ben Leubsdorf – WSJ
Almost all international debt is issued in major global currencies such as the U.S. dollar and the euro, but the financial crisis of 2007-2009 provided an opening for a handful of smaller currencies to gain ground, according to a new analysis from the Federal Reserve Bank of San Francisco.
jlne.ws/1o8KwCp

***DA: Another currency called “gold” has enjoyed renewed popularity as well.

Ex-Rabobank Employee Pleads Guilty in Libor-Rigging Probe
Erik Larson and Bob Van Voris – Bloomberg
A former Rabobank Groep senior trader pleaded guilty in New York to conspiring to manipulate a benchmark interest rate tied to trillions of dollars of securities to benefit his trading positions, the U.S. said.
Paul Robson, who worked at Rabobank’s London office and made the bank’s yen Libor submissions, pleaded guilty to a single conspiracy count in Manhattan federal court yesterday, the Justice Department said in a statement. The ex-trader is scheduled to be sentenced in 2017, the U.S. said.
jlne.ws/1rT4sg5

Bitcoin slumps $120, but does anyone care?
Katie Holliday – CNBC
The price of bitcoin plunged $120 over the past week, and one analyst told CNBC the crypto currency will fall further as it becomes less sensitive to ‘good news.’
jlne.ws/1o8Gwln

***DA: Yesterday’s news.

Indexes & Index Products

New type of ETF promises to shrink spreads
Yakob Peterseil – Risk.net
With the launch of their ‘international’ range of ETFs, iShares and Euroclear are creating a new type of ETF issuance inside an established structure. If their hopes pan out, all ETFs will look like this three to five years from now.
jlne.ws/1pWDmFj

Missing MBS in Bond Indexes Distort Funds, Citigroup Says
Jody Shenn – BloombergBusinessweek
After years of using purchases of U.S. government-backed mortgage securities as a stimulus tool, the Federal Reserve owns almost a third of the debt outstanding.
One rarely discussed consequence: Money managers are being pushed to add more of the securities than they otherwise might because the benchmark debt indexes that they’re judged against fail to exclude the Fed’s sizable holdings, according to Citigroup Inc. (C:US) analysts.
jlne.ws/1uSmfZE

NASDAQ OMX Lists First Trust Strategic Income ETF
CNN Money
FDIV seeks a high level of risk-adjusted income and diversification through the use of multiple asset classes, targeted investment strategies and specialized management teams. By tactically blending multiple investment strategies, which includes both fixed-income investments and income-producing equity securities, the Fund may provide a lower risk, total return alternative to focusing solely on one strategy. This approach focuses on providing risk-adjusted income and cap
jlne.ws/1w5dux2

It’s Fundamental: Year-to-Date Performance of Russell’s Fundamentally Weighted Indexes Relative to Russell’s Market Cap Weighted Indexes Tracking U.S. Small- and Large-Cap Stocks Help Illustrate Potential Benefits of Diversified Index Approaches
Press Release (via MarketWired)
jlne.ws/1uSmDYa

Sifma’s Municipal Swap Index to Use Only Data Reported to MSRB
Bloomberg
The Sifma Municipal Swap Index starting tomorrow will generate its weekly benchmark calculations using only data that has been reported to the Municipal Securities Rulemaking Board.
jlne.ws/1rSY20u

Gold

Countries With Largest Gold Reserves
Elena Holodny – Business Insider
Central banks purchased 118 tonnes in net gold in Q2 2014, representing a 28% year-over-year increase, according to The World Gold Council.
In May 2014, the European Central Bank and other European central banks signed the fourth Central Bank Gold Agreement (CBGA). The agreement says the central banks “currently do not have plans to sell significant amounts of gold,” and that it will last for five years starting in the end of September 2014.
jlne.ws/1uSlMGM

***DA: BI put out the top ten list, but most interesting to me is #12, Turkey, which has been aggressively purchasing of late, and Brazil, which made its first purchase in over 10 years.

FirstRand Lists Gold Bond On JSE
jlne.ws/1AuyuMu

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