First Impressions

Yesterday’s Top Three
Say what you will about the usefulness of the Fed’s “dot plot,” but you all clicked on it the most, so it’s got that going for it, which is nice. The ongoing efforts of banks, in this case Barclays, to improve working conditions got a nod from readers as Bloomberg’s Barclays Boosts Childcare Leave for U.S. Staff in Retention Push nabbed second place. A bunch of stories were lumped in third, the vast majority of which pertained to whether the Fed would hike once, twice or not at all in 2016 (the rest were, you guessed it, Brexit related).

Quote of the Day

“I felt almost under attack as different Goldman Sachs teams and products were presented to me, one after the other and almost relentlessly, without me even being given the opportunity to ask questions or reflect on them.”

LIA financial consultant Ali Jalal Baruni in the story, “Goldman Bankers Were ‘Like a Swarm,’ Libya Fund Adviser Says”

Lead Stories

Kuroda Keeps BOJ Powder Dry With Brexit Battle Shadowing the Yen
Bloomberg
Bank of Japan Governor Haruhiko Kuroda’s decision to hold fire on stimulus Thursday offers policy makers greater scope to react in a little over a week, when global financial markets will be contending with the U.K. vote on European Union membership.
bloom.bg/1tyASnu

****SD: So, bankers are out of ammo, but they still have powder? I can’t keep track of all these weaponized central banking analogies — some European video game plumber has a rocket launcher or something?

Why Some Banks Are Hurt More Than Others by Falling Rates
WSJ
Bank stocks have taken a beating as long-term interest rates sink ever lower. But not all lenders are equally exposed. A cocktail of global anxieties, from the Chinese economy to the U.K.’s potential exit from the European Union, has driven long-term rates down in recent weeks. On Wednesday, the Federal Reserve pushed them down further by lowering its projections for where rates are headed years from now.
on.wsj.com/1Q92Ek1

Citi’s forex executives holidayed as staff prepared for Brexit
Financial Times
Foreign exchange traders at Citigroup, the world’s biggest currencies-dealing bank, are pulling out the stops to prepare for next week’s UK referendum on EU membership and its potentially cataclysmic impact on sterling. But as rank-and-file workers worked long hours, five of the bank’s most senior currencies executives each took between one and three days out of work around last weekend to drive their sports cars, including some Ferraris, through France.
/goo.gl/shpk4W

****SD: I think the future holds repeated defacement of those Ferraris at the hands of disgruntled employees. And are these the same folks who got “sick” on exam days growing up?

You won’t believe what gets an email flagged at Goldman: CNBC has the list
CNBC
Bankers at Goldman Sachs might want to think twice before sending an email calling any trade “a sure bet.” They may want to pause before they send a note saying someone “embezzled the account.” And they probably don’t want to send an email using any one of 13 separate phrases that incnlude the F-word.
cb.cx/1tyEl5y

****SD: A bit of levity in trying times. I think my favorite flagged phrase is “Clowns {managing|running} the fund|show|portfolio|account|{my money}.”

UBS, Credit Suisse likely need 10 billion Sfr in new capital: SNB
Reuters
Switzerland’s two largest lenders, UBS and Credit Suisse, will likely each need to raise an extra 10 billion Swiss francs ($10.4 billion) in capital to meet new leverage requirements, the Swiss National Bank (SNB) said.
reut.rs/1Q93mxI

The Guardian view on Jo Cox: an attack on humanity, idealism and democracy
The Guardian
The slide from civilisation to barbarism is shorter than we might like to imagine. Every violent crime taints the ideal of an orderly society, but when that crime is committed against the people who are peacefully selected to write the rules, then the affront is that much more profound.
bit.ly/1Q8QTKy

****SD: From The Telegraph, Thomas Mair: Man arrested in connection with attack on Jo Cox was ‘a quiet loner who kept himself to himself’

Goldman Bankers Were ‘Like a Swarm,’ Libya Fund Adviser Says
Bloomberg
Goldman Sachs Group Inc. executives relentlessly pitched their products to financially illiterate staff from the Libyan Investment Authority as they sought to secure more than a billion dollars for the bank’s funds, a former adviser to the LIA told a London court Thursday.
bloom.bg/1tyH7Yu

****SD: Probably one of the better dressed swarms in history.

Europe Has Limited Defenses Against the Shock Waves of a Brexit
WSJ
This week’s sharp swings in financial markets are an ominous warning of what is likely to lie in store for the U.K. if it votes to quit the European Union in next week’s referendum. But they also contain a reminder that the shock of a British exit would be felt far beyond the U.K.
on.wsj.com/1tyHGRZ

Europeans warn of Brexit threat to UK’s crucial bank ‘passports’
Reuters
Britain’s partners are stepping up warnings that if it votes next week to leave the European Union, banks and financial firms based in London could lose their money-spinning EU “passports”. The City of London vies with New York as the world’s biggest financial centre in part thanks to the automatic right to sell services across the 28-nation bloc with low costs and a single set of rules under a system known as passporting, industry and European officials said.
reut.rs/1tyB4TL

For One Breed of Wall Street Bankers, Business Is Booming Again
Bloomberg
‘Firms are dying for experienced people. You need to act fast’
Energy companies made up 80% of bankruptcy cases last year
The job market is grim on Wall Street. Trading desks are shrinking, hiring is flat, even incentive pay is taking a hit. Except in one little corner of the financial world, where managers can’t read resumes fast enough. The turnaround expert is in hot demand.
bloom.bg/1tyGwWE

****SD: On the flip side of the hiring coin, Pimco planning to cut nearly 3 percent of global workforce: source

CFTC Swaps Report Update
Press Release
The CFTC Swaps Report provides a detailed weekly snapshot of the gross notional outstanding as of the penultimate Friday prior to the CFTC Swaps Report’s Wednesday publication date, as well as a detailed weekly total of the transaction volume (on both a ticket volume and dollar volume basis) ending that same penultimate Friday, in two asset classes (interest rate swaps, credit default swaps).
bit.ly/1UANKkv

Central Banks

Fed eyes lasting impediments to growth after rethink on outlook
Financial Times
Earlier this month Janet Yellen, the Federal Reserve chair, struck a broadly positive tone about the US economy. The big picture, she declared in a speech in Philadelphia, was “largely favourable” for an economy that had registered impressive gains since the Great Recession. Forecasts by the Fed on Wednesday tell a more sombre story. While policymakers left their predictions for economic growth and inflation largely unchanged, they now believe the central bank will have to keep rates even lower to sustain that outlook. What was already set to be the Fed’s shallowest rate-lifting cycle in modern times now looks even more glacial.
on.ft.com/1Q90wcg

****SD: From Investing.com: The Next Fed Rate Gets Rescheduled For ‘Never’. From Bloomberg: Yellen Says Forces Holding Down Rates May Be Long Lasting

The Fed and other central banks have lost their magic powers
MarketWatch
During the financial crisis of 2008-09, politicians facing difficult and electorally unpopular decisions cleverly passed the responsibility for the economy to central bankers. These policymakers accepted the task to nurse the global economy to health. But there are increasing doubts about central banks’ powers and their ability to deliver a recovery.
on.mktw.net/1tyzp0l

****SD: You can’t lose what you never had.

Untangling the New Dot Mystery at the Federal Reserve
Bloomberg
Not since the days of the negative dot has a lone Federal Reserve official aspired to blaze their own trail on the appropriate trajectory for interest rates.
bloom.bg/1Q8ZNYz

ECB’s Nowotny: ECB, BoE to provide liquidity to each other if needed
Reuters
The European Central Bank (ECB) and the Bank of England (BoE)have agreed to provide liquidity to each other if needed, ECB governing council member Ewald Nowotny said ahead of Britons’ June 23 vote on whether to stay in the European Union.
reut.rs/1Q8rcd3

Bank of Canada is Developing Blockchain-based CadCoin
Finance Magnates
It is no longer a question of if blockchain technology will be adopted by an influential central bank to upgrade its national financial system for a cashless economy, but when and who will be the first to deploy it. After previous revelations about major countries where a national blockchain currency is being experimented upon, like China and the UK, now the Bank of Canada is the latest institution to be discovered developing a cryptocurrency.
bit.ly/1tyCvkV

Janet Yellen: Helicopter money is an option in extreme situations
CNN
If the U.S. economy turns south in a big way, helicopters could be dropping cash over your neighborhood — courtesy of the Federal Reserve. That’s at least the concept of helicopter money — an unusual idea aimed at reviving economic growth, espoused by famed economist Milton Friedman. Fed Chair Janet Yellen has generally stayed away from endorsing this form of economic stimulus in the past. But on Wednesday, Yellen wouldn’t rule it out as a possible option in an extreme circumstance.
cnnmon.ie/1Q8UCHV

Monetary policy assessment of 16 June 2016 Monetary policy assessment of 16 June 2016
www.snb.ch
The Swiss National Bank (SNB) is maintaining its expansionary monetary policy. Interest on sight deposits at the SNB is to remain at – 0.75% and the target range for the three-month Libor is unchanged at between – 1.25% and – 0.25%. At the same time, the SNB will remain active in the foreign exchange market, as necessary. The negative interest rate and the SNB’s willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency.
bit.ly/1tyw6GG

Regulatory News

Republican Lawmaker’s Plan Details Curbs on Bank Regulators
WSJ
A plan by a top Republican lawmaker overseeing Wall Street banks would impose new strings and constraints on regulators. A summary plan of a bill by House Financial Services Committee Chairman Jeb Hensarling (R., Texas) seen by The Wall Street Journal includes initiatives such as requiring the Federal Reserve to disclose the models used to test banks’ health yearly, curtailing policy makers’ authority to request a “living will” annually and dismantling their authority to curb Wall Street pay. Mr. Hensarling is expected to unveil the legislative text of his bill next week.
on.wsj.com/1tyHCBJ

Lloyds Banking Group wins £3bn bond case
Financial Times
Thousands of investors have been dealt a blow after the UK Supreme Court narrowly ruled in favour of Lloyds Banking Group’s controversial decision to call in more than £3bn of high income-paying bonds. The UK’s highest court ruled by three votes to two that the bonds’ investment terms meant that Lloyds could redeem them early at face value. Investors were receiving as much as 16 per cent a year in interest.
on.ft.com/1Q94b9M

****SD: Whaddya know — a case that didn’t end with a giant fine.

Mansion House speech: The FCA’s new broom Andrew Bailey must act fast to revive confidence in the regulator after Martin Wheatley’s tenure
City A.M.
Tonight Mansion House once again acts as host to the great and good of the City’s financial services fraternity. Amid inevitable chatter about the EU referendum vote and darkening global economic clouds, attention will turn to the imminent changing of the guard at the Financial Conduct Authority.
bit.ly/1tywi8S

****SD: The FCA has a roundup of regulatory news from June thus far here

Regulation, Risk and the Rise of Negative Affirmation
TABB Forum
After nearly 15 years of effort and mandates to reduce risk in OTC derivatives, risk is once again creeping back into the system. With negative affirmation, if the recipient of a trade notice does not dispute the terms of the contract within a defined period, the trade is deemed ‘confirmed’ and the regulatory obligation has been met. But the lack of true bilateral confirmation reintroduces or perpetuates the very risks which the industry and regulators have worked so hard to mitigate.
goo.gl/ldUtbm

U.S. attorney in Manhattan probes Bangladesh Bank cyber heist: source
Reuters
The U.S. attorney’s office in Manhattan has opened an investigation of the cyber heist of $81 million from Bangladesh Bank’s account at the Federal Reserve Bank of New York, a law enforcement source said.
reut.rs/1tyx6uh

European Commission Welcomes EU Council’s Backing For A New Regulatory Framework Of Money Market Funds
Press Release
The European Commission welcomes the agreement on the reform of Money Market Funds (MMFs) that was reached today at the Permanent Representatives Committee (COREPER) of the Council. The agreement marks a further step in the completion of the post-crisis reform agenda and paves the way for trilogues with the European Parliament.
goo.gl/IHfg9a

Credit Suisse finds no wrongdoing by ex-banker linked to Brazil probe
Reuters
Credit Suisse Group AG said an internal investigation found no evidence that a former employee, Sérgio Firmeza Machado, used his position at the bank to help his father funnel illicit campaign donations to Brazilian politicians as part of a sweeping corruption scandal.
reut.rs/1Q8ZMnn

Currencies

MSCI’s pass on A shares casts doubt on yuan internationalization
Nikkei Asian Review
MSCI’s decision to postpone the inclusion of Chinese A shares into a key international stock index drove the yuan weaker Wednesday, dealing a blow to Beijing’s efforts to make it a global currency.
s.nikkei.com/1tyIrdH

Dovish Federal Reserve suggests more stable outlook for renminbi
South China Morning Post
China’s currency is set for a more stable outlook this year as the US Federal Reserve’s more measured approach to raising rates is likely to stem the possibility of large capital outflows and any resulting market volatility.
bit.ly/1Q8WFf2

In Brexit-Fuelled Battle For Safety, Yen Beats Swiss Franc
WSJ
The Swiss franc may be “the king of currencies,” just don’t tell that to the Japanese yen, which has been soaring even higher than its Alpine competitor amid the nerve-jangling run up to the U.K.’s referendum on European Union membership.
on.wsj.com/1Q927ib

Euro wakes up to Brexit threat
Financial Times
The threat of Brexit has weighed heavily on sterling and has begun to show up elsewhere in the currency universe — the euro. The implications of a possible Brexit are increasing pressure on the eurozone’s much maligned currency. Having been at the mercy of the dollar’s fluctuations for most of the year it is vulnerable to a market that, already sceptical about the durability of the euro, sees in Brexit a path that could lead to the unwinding of the vaunted European project.
on.ft.com/1Q92nO1

Don’t take your eyes off sterling as EU poll votes are counted
Financial Times
Sterling has been the tip of the market spear during the ebb and flow of Brexit anxiety. A point that will soon be driven home for global markets, policymakers and the portfolios of domestic and international investors. In or out, the result of the UK referendum on EU membership will trigger a substantial shift in the value of Cable — the shorthand used by traders to refer to the pound’s value against the dollar and a throwback to the era when shifts in the exchange rate were transmitted across the Atlantic via an undersea cable.
on.ft.com/1tyDr9a

Brexit Week Trading Tactics and Trader’s False Confidence
Finance Magnates
As British residents prepare to vote next week on whether the United Kingdom will ‘Bremain’ in the European Union (EU) or ‘Brexit’ from it, foreign exchange and multi-asset brokers are making preparations and traders should too – as the event could pose huge risk/reward opportunities, but not be suitable for everyone.
goo.gl/64SneD

Bonds

Foreign selling of U.S. Treasuries in April was most since 1978: data
Reuters
Foreign investors sold a record amount of U.S. Treasury bonds and notes for the month of April, according to U.S. Treasury Department data on Wednesday, as investors priced in a few more rate increases by the Federal Reserve this year.
reut.rs/1UeO8sN

****SD: Bloomberg: China Dumping More Than Treasuries as U.S. Stocks Join Fire Sale

Global Bonds Entering New Abnormal as Japan Leads Yield Meltdown
Bloomberg
Japanese, German and Swiss bond yields fell to records, as government debt around the world extended its best gains in two decades, with the prospect of Britain leaving the European Union boosting demand for havens.
bloom.bg/1Q8RLPe

Swiss 30-year government bond yield turns negative
MarketWatch
Investors are now paying for the privilege to park cash for up to three decades in Swiss government debt. The yield on the 30-year Swiss bond became the longest-dated maturity to fall into negative territory on Thursday, as government bond prices continued to rally due to heightened concerns over impending vote in the U.K. on whether or remain or leave the European Union.
on.mktw.net/1Q8TxQs

****SD: From WSJ: From 1 Month to 33 Years, Almost the Entire Yield Curve for Swiss Bonds is Negative

Global Bonds: Even Further Through the Looking Glass
WSJ
Chasing returns is a dangerous game, never more so with government bonds. This week alone, 10-year German yields have turned negative, and even more remarkably, yields on Swiss government bonds maturing in 2042 and 2049 have followed suit. Ten-year U.K. and Japanese yields have reached record lows.
on.wsj.com/1Q90Pns

U.S. Corporate And Municipal Debt Issuance Poised To Surge, CUSIP Requests Show
Press Release
CUSIP Global Services (CGS) today announced the release of its CUSIP Issuance Trends Report for May 2016. The report, which tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity, suggests continued growth in issuance of new corporate and municipal debt offerings over the next several weeks.
bit.ly/1tyBwBr

There’s a ‘black hole’ in the market
Business Insider
Are you worried about the bond market? Maybe you should be. At least that’s according to Paul Mortimer-Lee, the chief North America economist at BNP-Paribas, who says the bond market is not painting a pretty picture for the economy right now.
read.bi/1tyxPeQ

The U.S. yield curve may actually be too steep, says this rate strategist
MarketWatch
Investors have been fretting about the shrinking gap between short- and long-term U.S. Treasury yields—a phenomenon that tends to stir fears of a recession. But even though the yield curve at its flattest since November 2007, one interest-rate strategist argues that it’s actually much steeper than at the same point during previous Federal Reserve tightening cycles.
on.mktw.net/1tyxsRE

Indexes & Index Products

Small caps go for a ride on the Fed’s Tilt-a-Whirl
FTSE Russell
Summer in the US means fairs and amusement parks and with them come the ubiquitous “Tilt-a-Whirl” ride. The “Tilt-a-Whirl” spins its riders around on a wave shaped platform, an experience that can turn from exhilarating to nauseating, and back again, in a matter of seconds. Small caps have been on a similar ride in 2016 and the Fed has a hand on the start-stop lever.
/goo.gl/ka6DiV

China’s MSCI Index Denial a Boon for Singapore’s Plans
Bloomberg
What’s bad for China may be good for Singapore. MSCI Inc.’s decision to make China wait for its stocks to be added to global indexes is poised to direct investors to the city-state, which is home to a futures contract linked to mainland shares. Fund managers have been choosing to do business at offshore centers that are already part of the global financial system, rather than moving money into China, RHB Securities says
bloom.bg/1Pvw7iD

How the FTSE 100’s dividend could hobble the index
AOL Money UK
The FTSE 100 has made little progress above the 6,000 – 7,000 level for the past 20 years — at times, it’s been much lower. We first saw the index flirting with 7,000 during the tech bubble in 1999. Since then we’ve had the massive decline to below 3500 — the so-called “tech wreck” — as the index’s wild overvaluation normalised.
bit.ly/1Q9bJJG

****SD: I love the “Wigglier than a fiddler’s elbow” subhead in this article.

Swiss index business back at SIX Swiss Exchange
SIX Swiss Exchange
The Swiss stock exchange is taking over the distribution and marketing of all Swiss indices with immediate effect, operations will follow in the fourth quarter 2016.
bit.ly/1Q93aia

Gold

Gold miners emerge through looking glass as havens from Brexit
Financial Times
It is a cockeyed world when Petropavlovsk is deemed a haven from Brexit. It extracts gold from a part of Russia geographically so far to the right of Greenwich that it is left. But on Wednesday the Fed trimmed interest rate expectations, partly on nerves over the UK leaving the EU, the gold price hit a two-year high above $1,300 an ounce and gold miners’ shares spiked.
on.ft.com/1Q91tRP

Who is Peter Schiff, and Why Does He Love Gold So Much?
The Motley Fool
Peter Schiff loves gold. That’s no secret. But before you follow the advice on his blog, show, or news appearances, make sure you understand the rest of the story.
bit.ly/1Q946TI

Miscellaneous

Goldman Sachs figured out how to learn what Wall Street stock analysts really mean
Business Insider
Wall Street stock analysts have a language all of their own. First, there is the technical language. There are buy upgrades, neutral ratings, and very occasionally an underweight rating, or sell. There are all the financial terms that come with analyzing public company financials.
read.bi/1Q8P0NZ

Clinton’s Progressive Beacon Is a Former Goldman Sachs Banker and Bob Rubin Protégé
Bloomberg
Over tea at Hillary Clinton’s Washington home in late 2014, Elizabeth Warren warned her host that when it comes to Wall Street, what mattered most was the people Clinton surrounded herself with. Months later, as Clinton launched her presidential campaign, Gary Gensler, who had been a Goldman Sachs banker before he became a senior policy aide and Bob Rubin protégé during the deregulatory years of Bill Clinton’s Treasury Department, came on board, in part to serve as a driving force behind her economic-policy shop. Remarkably, Warren would be one of his strongest supporters.
bloom.bg/1Q8Qwj5

What John Oliver Gets Wrong About Your Retirement Savings
Fortune
The host of “Last Week Tonight” made a boring topic engaging, but let’s take a closer look. I’m a firm believer in using humor to explain material that can be as dense and dry as some topics in personal finance can be. On that note, John Oliver hit it out of the park last weekend in his coverage of retirement funds. Not only was he entertaining, he was right…to a point.
for.tn/1Q8PuDU

First Impressions

Yesterday’s Top Three
Say what you will about the usefulness of the Fed’s “dot plot,” but you all clicked on it the most, so it’s got that going for it, which is nice. The ongoing efforts of banks, in this case Barclays, to improve working conditions got a nod from readers as Bloomberg’s Barclays Boosts Childcare Leave for U.S. Staff in Retention Push nabbed second place. A bunch of stories were lumped in third, the vast majority of which pertained to whether the Fed would hike once, twice or not at all in 2016 (the rest were, you guessed it, Brexit related).

Quote of the Day

“I felt almost under attack as different Goldman Sachs teams and products were presented to me, one after the other and almost relentlessly, without me even being given the opportunity to ask questions or reflect on them.”

LIA financial consultant Ali Jalal Baruni in the story, “Goldman Bankers Were ‘Like a Swarm,’ Libya Fund Adviser Says”

Lead Stories

Kuroda Keeps BOJ Powder Dry With Brexit Battle Shadowing the Yen
Bloomberg
Bank of Japan Governor Haruhiko Kuroda’s decision to hold fire on stimulus Thursday offers policy makers greater scope to react in a little over a week, when global financial markets will be contending with the U.K. vote on European Union membership.
bloom.bg/1tyASnu

****SD: So, bankers are out of ammo, but they still have powder? I can’t keep track of all these weaponized central banking analogies — some European video game plumber has a rocket launcher or something?

Why Some Banks Are Hurt More Than Others by Falling Rates
WSJ
Bank stocks have taken a beating as long-term interest rates sink ever lower. But not all lenders are equally exposed. A cocktail of global anxieties, from the Chinese economy to the U.K.’s potential exit from the European Union, has driven long-term rates down in recent weeks. On Wednesday, the Federal Reserve pushed them down further by lowering its projections for where rates are headed years from now.
on.wsj.com/1Q92Ek1

Citi’s forex executives holidayed as staff prepared for Brexit
Financial Times
Foreign exchange traders at Citigroup, the world’s biggest currencies-dealing bank, are pulling out the stops to prepare for next week’s UK referendum on EU membership and its potentially cataclysmic impact on sterling. But as rank-and-file workers worked long hours, five of the bank’s most senior currencies executives each took between one and three days out of work around last weekend to drive their sports cars, including some Ferraris, through France.
/goo.gl/shpk4W

****SD: I think the future holds repeated defacement of those Ferraris at the hands of disgruntled employees. And are these the same folks who got “sick” on exam days growing up?

You won’t believe what gets an email flagged at Goldman: CNBC has the list
CNBC
Bankers at Goldman Sachs might want to think twice before sending an email calling any trade “a sure bet.” They may want to pause before they send a note saying someone “embezzled the account.” And they probably don’t want to send an email using any one of 13 separate phrases that incnlude the F-word.
cb.cx/1tyEl5y

****SD: A bit of levity in trying times. I think my favorite flagged phrase is “Clowns {managing|running} the fund|show|portfolio|account|{my money}.”

UBS, Credit Suisse likely need 10 billion Sfr in new capital: SNB
Reuters
Switzerland’s two largest lenders, UBS and Credit Suisse, will likely each need to raise an extra 10 billion Swiss francs ($10.4 billion) in capital to meet new leverage requirements, the Swiss National Bank (SNB) said.
reut.rs/1Q93mxI

The Guardian view on Jo Cox: an attack on humanity, idealism and democracy
The Guardian
The slide from civilisation to barbarism is shorter than we might like to imagine. Every violent crime taints the ideal of an orderly society, but when that crime is committed against the people who are peacefully selected to write the rules, then the affront is that much more profound.
bit.ly/1Q8QTKy

****SD: From The Telegraph, Thomas Mair: Man arrested in connection with attack on Jo Cox was ‘a quiet loner who kept himself to himself’

Goldman Bankers Were ‘Like a Swarm,’ Libya Fund Adviser Says
Bloomberg
Goldman Sachs Group Inc. executives relentlessly pitched their products to financially illiterate staff from the Libyan Investment Authority as they sought to secure more than a billion dollars for the bank’s funds, a former adviser to the LIA told a London court Thursday.
bloom.bg/1tyH7Yu

****SD”: Probably one of the better dressed swarms in history.

Europe Has Limited Defenses Against the Shock Waves of a Brexit
WSJ
This week’s sharp swings in financial markets are an ominous warning of what is likely to lie in store for the U.K. if it votes to quit the European Union in next week’s referendum. But they also contain a reminder that the shock of a British exit would be felt far beyond the U.K.
on.wsj.com/1tyHGRZ

Europeans warn of Brexit threat to UK’s crucial bank ‘passports’
Reuters
Britain’s partners are stepping up warnings that if it votes next week to leave the European Union, banks and financial firms based in London could lose their money-spinning EU “passports”. The City of London vies with New York as the world’s biggest financial centre in part thanks to the automatic right to sell services across the 28-nation bloc with low costs and a single set of rules under a system known as passporting, industry and European officials said.
reut.rs/1tyB4TL

For One Breed of Wall Street Bankers, Business Is Booming Again
Bloomberg
‘Firms are dying for experienced people. You need to act fast’
Energy companies made up 80% of bankruptcy cases last year
The job market is grim on Wall Street. Trading desks are shrinking, hiring is flat, even incentive pay is taking a hit. Except in one little corner of the financial world, where managers can’t read resumes fast enough. The turnaround expert is in hot demand.
bloom.bg/1tyGwWE

****SD: On the flip side of the hiring coin, Pimco planning to cut nearly 3 percent of global workforce: source

CFTC Swaps Report Update
Press Release
The CFTC Swaps Report provides a detailed weekly snapshot of the gross notional outstanding as of the penultimate Friday prior to the CFTC Swaps Report’s Wednesday publication date, as well as a detailed weekly total of the transaction volume (on both a ticket volume and dollar volume basis) ending that same penultimate Friday, in two asset classes (interest rate swaps, credit default swaps).
bit.ly/1UANKkv

Central Banks

Fed eyes lasting impediments to growth after rethink on outlook
Financial Times
Earlier this month Janet Yellen, the Federal Reserve chair, struck a broadly positive tone about the US economy. The big picture, she declared in a speech in Philadelphia, was “largely favourable” for an economy that had registered impressive gains since the Great Recession. Forecasts by the Fed on Wednesday tell a more sombre story. While policymakers left their predictions for economic growth and inflation largely unchanged, they now believe the central bank will have to keep rates even lower to sustain that outlook. What was already set to be the Fed’s shallowest rate-lifting cycle in modern times now looks even more glacial.
on.ft.com/1Q90wcg

****SD: From Investing.com: The Next Fed Rate Gets Rescheduled For ‘Never’. From Bloomberg: Yellen Says Forces Holding Down Rates May Be Long Lasting

The Fed and other central banks have lost their magic powers
MarketWatch
During the financial crisis of 2008-09, politicians facing difficult and electorally unpopular decisions cleverly passed the responsibility for the economy to central bankers. These policymakers accepted the task to nurse the global economy to health. But there are increasing doubts about central banks’ powers and their ability to deliver a recovery.
on.mktw.net/1tyzp0l

****SD: You can’t lose what you never had. Just sayin’.

Untangling the New Dot Mystery at the Federal Reserve
Bloomberg
Not since the days of the negative dot has a lone Federal Reserve official aspired to blaze their own trail on the appropriate trajectory for interest rates.
bloom.bg/1Q8ZNYz

ECB’s Nowotny: ECB, BoE to provide liquidity to each other if needed
Reuters
The European Central Bank (ECB) and the Bank of England (BoE)have agreed to provide liquidity to each other if needed, ECB governing council member Ewald Nowotny said ahead of Britons’ June 23 vote on whether to stay in the European Union.
reut.rs/1Q8rcd3

Bank of Canada is Developing Blockchain-based CadCoin
Finance Magnates
It is no longer a question of if blockchain technology will be adopted by an influential central bank to upgrade its national financial system for a cashless economy, but when and who will be the first to deploy it. After previous revelations about major countries where a national blockchain currency is being experimented upon, like China and the UK, now the Bank of Canada is the latest institution to be discovered developing a cryptocurrency.
bit.ly/1tyCvkV

Janet Yellen: Helicopter money is an option in extreme situations
CNN
If the U.S. economy turns south in a big way, helicopters could be dropping cash over your neighborhood — courtesy of the Federal Reserve. That’s at least the concept of helicopter money — an unusual idea aimed at reviving economic growth, espoused by famed economist Milton Friedman. Fed Chair Janet Yellen has generally stayed away from endorsing this form of economic stimulus in the past. But on Wednesday, Yellen wouldn’t rule it out as a possible option in an extreme circumstance.
cnnmon.ie/1Q8UCHV

Monetary policy assessment of 16 June 2016 Monetary policy assessment of 16 June 2016
www.snb.ch
The Swiss National Bank (SNB) is maintaining its expansionary monetary policy. Interest on sight deposits at the SNB is to remain at – 0.75% and the target range for the three-month Libor is unchanged at between – 1.25% and – 0.25%. At the same time, the SNB will remain active in the foreign exchange market, as necessary. The negative interest rate and the SNB’s willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency.
bit.ly/1tyw6GG

Regulatory News

Republican Lawmaker’s Plan Details Curbs on Bank Regulators
WSJ
A plan by a top Republican lawmaker overseeing Wall Street banks would impose new strings and constraints on regulators. A summary plan of a bill by House Financial Services Committee Chairman Jeb Hensarling (R., Texas) seen by The Wall Street Journal includes initiatives such as requiring the Federal Reserve to disclose the models used to test banks’ health yearly, curtailing policy makers’ authority to request a “living will” annually and dismantling their authority to curb Wall Street pay. Mr. Hensarling is expected to unveil the legislative text of his bill next week.
on.wsj.com/1tyHCBJ

Lloyds Banking Group wins £3bn bond case
Financial Times
Thousands of investors have been dealt a blow after the UK Supreme Court narrowly ruled in favour of Lloyds Banking Group’s controversial decision to call in more than £3bn of high income-paying bonds. The UK’s highest court ruled by three votes to two that the bonds’ investment terms meant that Lloyds could redeem them early at face value. Investors were receiving as much as 16 per cent a year in interest.
on.ft.com/1Q94b9M

****SD: Whaddya know — a case that didn’t end with a giant fine.

Mansion House speech: The FCA’s new broom Andrew Bailey must act fast to revive confidence in the regulator after Martin Wheatley’s tenure
City A.M.
Tonight Mansion House once again acts as host to the great and good of the City’s financial services fraternity. Amid inevitable chatter about the EU referendum vote and darkening global economic clouds, attention will turn to the imminent changing of the guard at the Financial Conduct Authority.
bit.ly/1tywi8S

****SD: The FCA has a roundup of regulatory news from June thus far here

Regulation, Risk and the Rise of Negative Affirmation
TABB Forum
After nearly 15 years of effort and mandates to reduce risk in OTC derivatives, risk is once again creeping back into the system. With negative affirmation, if the recipient of a trade notice does not dispute the terms of the contract within a defined period, the trade is deemed ‘confirmed’ and the regulatory obligation has been met. But the lack of true bilateral confirmation reintroduces or perpetuates the very risks which the industry and regulators have worked so hard to mitigate.
goo.gl/ldUtbm

U.S. attorney in Manhattan probes Bangladesh Bank cyber heist: source
Reuters
The U.S. attorney’s office in Manhattan has opened an investigation of the cyber heist of $81 million from Bangladesh Bank’s account at the Federal Reserve Bank of New York, a law enforcement source said.
reut.rs/1tyx6uh

European Commission Welcomes EU Council’s Backing For A New Regulatory Framework Of Money Market Funds
Press Release
The European Commission welcomes the agreement on the reform of Money Market Funds (MMFs) that was reached today at the Permanent Representatives Committee (COREPER) of the Council. The agreement marks a further step in the completion of the post-crisis reform agenda and paves the way for trilogues with the European Parliament.
goo.gl/IHfg9a

Credit Suisse finds no wrongdoing by ex-banker linked to Brazil probe
Reuters
Credit Suisse Group AG said an internal investigation found no evidence that a former employee, Sérgio Firmeza Machado, used his position at the bank to help his father funnel illicit campaign donations to Brazilian politicians as part of a sweeping corruption scandal.
reut.rs/1Q8ZMnn

Currencies

MSCI’s pass on A shares casts doubt on yuan internationalization
Nikkei Asian Review
MSCI’s decision to postpone the inclusion of Chinese A shares into a key international stock index drove the yuan weaker Wednesday, dealing a blow to Beijing’s efforts to make it a global currency.
s.nikkei.com/1tyIrdH

Dovish Federal Reserve suggests more stable outlook for renminbi
South China Morning Post
China’s currency is set for a more stable outlook this year as the US Federal Reserve’s more measured approach to raising rates is likely to stem the possibility of large capital outflows and any resulting market volatility.
bit.ly/1Q8WFf2

In Brexit-Fuelled Battle For Safety, Yen Beats Swiss Franc
WSJ
The Swiss franc may be “the king of currencies,” just don’t tell that to the Japanese yen, which has been soaring even higher than its Alpine competitor amid the nerve-jangling run up to the U.K.’s referendum on European Union membership.
on.wsj.com/1Q927ib

Euro wakes up to Brexit threat
Financial Times
The threat of Brexit has weighed heavily on sterling and has begun to show up elsewhere in the currency universe — the euro. The implications of a possible Brexit are increasing pressure on the eurozone’s much maligned currency. Having been at the mercy of the dollar’s fluctuations for most of the year it is vulnerable to a market that, already sceptical about the durability of the euro, sees in Brexit a path that could lead to the unwinding of the vaunted European project.
on.ft.com/1Q92nO1

Don’t take your eyes off sterling as EU poll votes are counted
Financial Times
Sterling has been the tip of the market spear during the ebb and flow of Brexit anxiety. A point that will soon be driven home for global markets, policymakers and the portfolios of domestic and international investors. In or out, the result of the UK referendum on EU membership will trigger a substantial shift in the value of Cable — the shorthand used by traders to refer to the pound’s value against the dollar and a throwback to the era when shifts in the exchange rate were transmitted across the Atlantic via an undersea cable.
on.ft.com/1tyDr9a

Brexit Week Trading Tactics and Trader’s False Confidence
Finance Magnates
As British residents prepare to vote next week on whether the United Kingdom will ‘Bremain’ in the European Union (EU) or ‘Brexit’ from it, foreign exchange and multi-asset brokers are making preparations and traders should too – as the event could pose huge risk/reward opportunities, but not be suitable for everyone.
goo.gl/64SneD

Bonds

Foreign selling of U.S. Treasuries in April was most since 1978: data
Reuters
Foreign investors sold a record amount of U.S. Treasury bonds and notes for the month of April, according to U.S. Treasury Department data on Wednesday, as investors priced in a few more rate increases by the Federal Reserve this year.
reut.rs/1UeO8sN

****SD: Bloomberg: China Dumping More Than Treasuries as U.S. Stocks Join Fire Sale

Global Bonds Entering New Abnormal as Japan Leads Yield Meltdown
Bloomberg
Japanese, German and Swiss bond yields fell to records, as government debt around the world extended its best gains in two decades, with the prospect of Britain leaving the European Union boosting demand for havens.
bloom.bg/1Q8RLPe

Swiss 30-year government bond yield turns negative
MarketWatch
Investors are now paying for the privilege to park cash for up to three decades in Swiss government debt. The yield on the 30-year Swiss bond became the longest-dated maturity to fall into negative territory on Thursday, as government bond prices continued to rally due to heightened concerns over impending vote in the U.K. on whether or remain or leave the European Union.
on.mktw.net/1Q8TxQs

****SD: From WSJ: From 1 Month to 33 Years, Almost the Entire Yield Curve for Swiss Bonds is Negative

Global Bonds: Even Further Through the Looking Glass
WSJ
Chasing returns is a dangerous game, never more so with government bonds. This week alone, 10-year German yields have turned negative, and even more remarkably, yields on Swiss government bonds maturing in 2042 and 2049 have followed suit. Ten-year U.K. and Japanese yields have reached record lows.
on.wsj.com/1Q90Pns

U.S. Corporate And Municipal Debt Issuance Poised To Surge, CUSIP Requests Show
Press Release
CUSIP Global Services (CGS) today announced the release of its CUSIP Issuance Trends Report for May 2016. The report, which tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity, suggests continued growth in issuance of new corporate and municipal debt offerings over the next several weeks.
bit.ly/1tyBwBr

There’s a ‘black hole’ in the market
Business Insider
Are you worried about the bond market? Maybe you should be. At least that’s according to Paul Mortimer-Lee, the chief North America economist at BNP-Paribas, who says the bond market is not painting a pretty picture for the economy right now.
read.bi/1tyxPeQ

The U.S. yield curve may actually be too steep, says this rate strategist
MarketWatch
Investors have been fretting about the shrinking gap between short- and long-term U.S. Treasury yields—a phenomenon that tends to stir fears of a recession. But even though the yield curve at its flattest since November 2007, one interest-rate strategist argues that it’s actually much steeper than at the same point during previous Federal Reserve tightening cycles.
on.mktw.net/1tyxsRE

Indexes & Index Products

Small caps go for a ride on the Fed’s Tilt-a-Whirl
FTSE Russell
Summer in the US means fairs and amusement parks and with them come the ubiquitous “Tilt-a-Whirl” ride. The “Tilt-a-Whirl” spins its riders around on a wave shaped platform, an experience that can turn from exhilarating to nauseating, and back again, in a matter of seconds. Small caps have been on a similar ride in 2016 and the Fed has a hand on the start-stop lever.
/goo.gl/ka6DiV

China’s MSCI Index Denial a Boon for Singapore’s Plans
Bloomberg
What’s bad for China may be good for Singapore. MSCI Inc.’s decision to make China wait for its stocks to be added to global indexes is poised to direct investors to the city-state, which is home to a futures contract linked to mainland shares. Fund managers have been choosing to do business at offshore centers that are already part of the global financial system, rather than moving money into China, RHB Securities says
bloom.bg/1Pvw7iD

How the FTSE 100’s dividend could hobble the index
AOL Money UK
The FTSE 100 has made little progress above the 6,000 – 7,000 level for the past 20 years — at times, it’s been much lower. We first saw the index flirting with 7,000 during the tech bubble in 1999. Since then we’ve had the massive decline to below 3500 — the so-called “tech wreck” — as the index’s wild overvaluation normalised.
bit.ly/1Q9bJJG

****SD: I love the “Wigglier than a fiddler’s elbow” subhead in this article.

Swiss index business back at SIX Swiss Exchange
SIX Swiss Exchange
The Swiss stock exchange is taking over the distribution and marketing of all Swiss indices with immediate effect, operations will follow in the fourth quarter 2016.
bit.ly/1Q93aia

Gold

Gold miners emerge through looking glass as havens from Brexit
Financial Times
It is a cockeyed world when Petropavlovsk is deemed a haven from Brexit. It extracts gold from a part of Russia geographically so far to the right of Greenwich that it is left. But on Wednesday the Fed trimmed interest rate expectations, partly on nerves over the UK leaving the EU, the gold price hit a two-year high above $1,300 an ounce and gold miners’ shares spiked.
on.ft.com/1Q91tRP

Who is Peter Schiff, and Why Does He Love Gold So Much?
The Motley Fool
Peter Schiff loves gold. That’s no secret. But before you follow the advice on his blog, show, or news appearances, make sure you understand the rest of the story.
bit.ly/1Q946TI

Miscellaneous

Goldman Sachs figured out how to learn what Wall Street stock analysts really mean
Business Insider
Wall Street stock analysts have a language all of their own. First, there is the technical language. There are buy upgrades, neutral ratings, and very occasionally an underweight rating, or sell. There are all the financial terms that come with analyzing public company financials.
read.bi/1Q8P0NZ

Clinton’s Progressive Beacon Is a Former Goldman Sachs Banker and Bob Rubin Protégé
Bloomberg
Over tea at Hillary Clinton’s Washington home in late 2014, Elizabeth Warren warned her host that when it comes to Wall Street, what mattered most was the people Clinton surrounded herself with. Months later, as Clinton launched her presidential campaign, Gary Gensler, who had been a Goldman Sachs banker before he became a senior policy aide and Bob Rubin protégé during the deregulatory years of Bill Clinton’s Treasury Department, came on board, in part to serve as a driving force behind her economic-policy shop. Remarkably, Warren would be one of his strongest supporters.
bloom.bg/1Q8Qwj5

What John Oliver Gets Wrong About Your Retirement Savings
Fortune
The host of “Last Week Tonight” made a boring topic engaging, but let’s take a closer look. I’m a firm believer in using humor to explain material that can be as dense and dry as some topics in personal finance can be. On that note, John Oliver hit it out of the park last weekend in his coverage of retirement funds. Not only was he entertaining, he was right…to a point.
for.tn/1Q8PuDU

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