First Impressions

Scott Gordon, Rosenthal Collins Group – Seven (Slightly Unconventional) Career Tips From a Former Summer Intern
JohnLothianNews.com

“Trying is the key. I’ve had some successes in my life and I’ve had a bunch of failures — some spectacular failures… But whichever you have, if it’s a success or a failure, they’re momentary. You can take a victory lap if you have a success or you can take a misery lap if you have a failure. But in either case it’s fleeting, it’s gone and you better get on with your life.”

Scott Gordon, CEO of Rosenthal Collins Group, has career advice that applies whether you are shoveling snow or breeding horses: start by taking a holistic look at what is going on in the industry, not just the day-to-day activities that involve you personally. If you are able to take that big picture look into account, the rest is fairly simple to implement. Once aware of the situation, be ready for anything, since careers are taxis not trains — they don’t take linear paths to their destinations. Gordon expands on his career advice in this video, perhaps most importantly reminding audiences not to obfuscate their lexicon.

Watch the video at MarketsWikiEducation.com »

Quote of the Day

“There is so much innovation happening in payments systems outside of this country. The US banking system is not on the leading edge.”

Sean Rodriguez, head of the Federal Reserve’s Faster Payments Task Force, in the story, “US faster payments: Banking’s technological backwater”

Lead Stories

Lew Urges Congress to Lift Debt Limit as Boehner Vows No Default
Kasia Klimasinska – Bloomberg
Treasury Secretary Jacob J. Lew urged Congress to act now to increase the U.S. debt limit, calling it irresponsible for lawmakers to use political brinkmanship that could jeopardize the government’s record of honoring its obligations.
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Regulators Reviewing Steps to Address Treasury Market Volatility; SEC’s Mary Jo White says agency could subject venues for trading government bonds to new oversight
Katy Burne – WSJ
Regulators analyzing sharp moves in the $12.8 trillion U.S. Treasury market are reviewing a series of steps and potential rule enhancements to safeguard the integrity of what has long been the world’s most liquid securities market.
jlne.ws/1M6QC25

Jim Chanos Nails the Link Between Debt and Energy
Tracy Alloway – Bloomberg
So begins the latest presentation from renowned short-seller Jim Chanos. What follows is a powerful outline of the spirally debt dynamics that now dominate the future of the oil industry. At the heart of Chanos’s thesis is the contention that years of low interest rates, cheap financing, overeager investors and ambitious managers have helped propel the boom in U.S. shale and imbue it with near unstoppable momentum; U.S. oil production is expected to grow 6 percent in 2015, despite a stunning 59 percent drop in the U.S. rig count over the past year.
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Citadel positions itself at the vanguard of market change
James Rundle – Financial News
In becoming the first non-bank member of Swapclear, Citadel Securities (Europe) has signalled that one of the most fundamental structural transformations to come out of the 2008 financial crisis could now not only be irrevocable, but may actually have prompted a power shift away from traditional dealers.
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Saudis Risk Draining Financial Assets in 5 Years, IMF Says
Ahmed Feteha – Bloomberg
Saudi Arabia may run out of financial assets needed to support spending within five years if the government maintains current policies, the International Monetary Fund said, underscoring the need of measures to shore up public finances amid the drop in oil prices.
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Free banking here to stay and big lenders to remain intact, as watchdog rules in favour of status quo
Tim Wallace – The Telegraph
Britain’s biggest banks will not be broken up by the regulators, the competition authorities are expected to say, arguing it would do little to encourage customers to shop around
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The Woman Who Got Big Banks to Pay Billions for Breaking Iran Sanctions
Keri Geiger – Bloomberg
Counting Credit Agricole SA’s $787 million settlement, global banks have now paid nearly $15 billion in fines, penalties and forfeitures in six years for violating U.S. sanctions laws.
The massive effort may not have happened if Laura Billings hadn’t gone back, one last time, to a dusty file shoved in a corner of her office.
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Credit Suisse to Launch $6.3 Billion Capital Increase
John Letzing – WSJ
Credit Suisse Group AG ‘s new chief executive put his stamp on the bank Wednesday, announcing plans to raise $6.3 billion in capital and scale back investment banking.
The strategy unveiled by Tidjane Thiam, who joined Credit Suisse as CEO in July, included slashing costs and shaking up senior management.
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Stock Volatility Moves Treasurys
Larry Swedroe – ETF.com
Understanding the volatility of Treasury bond returns, as well as the volatility of both the level and slope of the Treasury term-structure, are fundamental issues in finance. What’s more, they have important implications for investors and portfolio design.
Researchers have offered both theory and empirical evidence that suggest important linkages between equity risk and the Treasury bond market.
jlne.ws/1KoGD79

RushCard Breakdown Affects Thousands of Prepaid Debit Card Users
Liz Moyer and Jessica Silver-Greenberg – NY Times
A woman in Philadelphia was turned away from a McDonald’s when her card was declined. Another woman, in Decatur, Ga., couldn’t pay for her husband’s heart medication. And an autoworker in Detroit accepted food from colleagues because she had no access to her money.
jlne.ws/1jTOC6R

CBI warns of ‘huge’ uncertainty from Brexit
Jim Pickard – Financial Times
The CBI has issued a clear message that the UK should remain in the EU — warning that all of the other options present serious disadvantages and “huge” uncertainty.
jlne.ws/1jTOwvS

Ugh, it looks like we’re going to have another US debt fight
Matt Phillips – Quartz
Get ready for more fun and games in Washington.
Investors are bidding up the cost of insurance on US government bonds, in a sign that markets are bracing for yet another debt-ceiling fight in the nation’s capital. It would be the latest in a series of fiscal showdowns that have hampered the economic recovery from the Great Recession.
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Ireland right to be wary on world economy
Joe Gill – Irish Examiner
There is an odd and uncomfortable divergence currently taking place between the general mood around Ireland and the experience of international financial investors, writes Joe Gill.
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HSBC Joins Banks Sharing Bond Data With Matchmaker Algomi
Anchalee Worrachate – Bloomberg
Some of Europe’s biggest lenders have opened their doors for a former UBS Group AG executive to install an internal search machine that tracks availability of their bonds. Especially the ones people rarely trade.
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Speculative-grade companies in the S&P 500
Sam Ro – Business Insider
The junk bond market has attracted a lot of attention lately, as spreads have blown out.
Also referred to as high-yield bonds, these debt securities are issued by companies with low credit quality. Because of the higher risks that come with lending to such companies, they have to offer higher yields than those of their investment-grade peers. When spreads increase, it’s costing more for these junk corporates to borrow.
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Puerto Rico breaks off talks with creditor group
Dan Burns and Megan Davies – Reuters
Puerto Rico’s restructuring efforts took a setback on Wednesday when talks between its Government Development Bank (GDB) and a group of creditors fell apart with no “mutually acceptable arrangement,” according to a statement from the government.
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J.P. Morgan Near Deal to Sell Majority of Highbridge Private Equity Business
Juliet Chung and Emily Glazer – WSJ
J.P. Morgan Chase & Co. is close to relinquishing control of a $22 billion private equity business, turning loose part of a firm it acquired before the financial crisis and helped quadruple in size.
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Barclays joins list of banks seeking ringfencing waiver
Martin Arnold and Caroline Binham – Financial Times
The queue of banks planning to ask the UK regulator for a waiver on its “ringfencing” rules keeps growing.
The latest is Barclays, which is in talks with the regulator about a transitional arrangement to make its ringfenced retail bank a wholly owned subsidiary of the rest of the group, rather than splitting them into standalone entities.
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Loan-Market Slump Threatens to Gum Up Wall Street’s M&A Machine
Christine Idzelis – Bloomberg
Here’s an ominous sign for Wall Street’s debt-fueled M&A bonanza: Investors are increasingly wary of loans that fund leveraged takeovers.
Almost half of the $75 billion buyout loans arranged in the U.S. last year and tracked by Bloomberg in the secondary market are trading below their issue price.
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US faster payments: Banking’s technological backwater
Helen Avery – Euromoney Magazine
Fintech firms and foreign adoption of faster payments are revealing what many have long known – US consumer banks have resisted innovation in favour of profits. Now they face a death by a thousand cuts unless they embrace change.
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An invitation to Putin regarding Ukraine: Do the maths
Paul Murphy – Financial Times
Martin Wolf was fuming about Russia on Wednesday — incensed specifically about its stance towards Ukraine’s attempted debt restructuring. He really doesn’t like the fact that Russia’s refusal to join August’s $18bn deal with private bond holders will block Ukraine’s access to IMF money, promising to collapse the country’s economy.
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U.S. judge rules Goldman must defend Tibco sale lawsuit
Tom Hals – Reuters
A U.S. judge ruled on Tuesday that Goldman Sachs Group Inc must defend a class action over its role in the 2014 sale of Tibco Software Inc, the latest ruling against a Wall Street bank over a corporate deal.
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Central Banks

These Are the Fed’s Three Weapons If the Economy Falters
Craig Torres – Bloomberg
The Federal Reserve Board’s army of economists are the ultimate umbrella people: they prepare for rain on sunny days.
Even though no Federal Open Market Committee member has forecast a recession in the next three years, a shaky global environment has clouded the U.S. economic outlook. With the central bank’s main policy rate stuck at zero since December 2008, that means Fed staff is probably already mulling other ways to stimulate growth.
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ECB prepares to consider options for QE expansion
Claire Jones – Financial Times
Eurozone central bankers gather in Malta this week, where they are expected to discuss options for beefing up a EUR1.1tn quantitative easing programme should growth and inflation in the currency area continue to disappoint.
The European Central Bank launched its unprecedented QE package in January with a promise to buy EUR60bn-worth of mostly government bonds until September 2016 in an effort to kickstart the weak eurozone recovery.
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You’re Not Supposed to Understand the Federal Reserve
Adam Davidson – NY Times
Imagine if aliens in a spacecraft were studying the United States from above. Their conclusion, I expect, would be that the single most important decision these inscrutable humans make each year is whether to plant corn, soybeans or wheat. No decision, year after year, transforms more square miles of American land than the choice farmers make about which crops to grow. In some years, those aliens would see huge swaths of tight green rows of soybean; in others, more tall corn with yellow tufts; in others, an unusual abundance of wheat in, well, amber waves. Earlier this month, Rick Stern, who farms 1,500 acres in central New Jersey with his father, told me that he had just spent weeks making this very decision. He carefully studied the global market reports to learn about recent yields in Argentina and Brazil, America’s leading rivals for soybean exports. He grew up watching his father and grandfather face the same dilemma each fall, using as much information as they could scrape together.
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Resilient euro casts doubt on ‘Super’ Mario’s policy aims
Roger Blitz and Dan McCrum – Financial Times
When “Super” Mario Draghi launched his much-trailed bond-buying programme in January, the president of the European Central Bank said expectations worked only if there was “a certain credibility”.
Having turned his promise of quantitative easing into reality, he was able to add: “Today we are showing that credibility is deserved.”
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IMF Survey : Commodity Price Drop Puts Pressure on Monetary Policy in Low-Income Countries
IMF
While much attention has been paid to monetary policy reforms in advanced economies in recent years, problems facing low- and lower-middle income countries seeking to stabilize their economies remain largely under researched, said Maurice Obstfeld, the IMF’s chief economist.
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To Hike Or Not To Hike? Monetary Policy In Latin America During Fed Liftoff
Carlos Caceres, Yan Carrière-Swallow, and Bertrand Gruss – Seeking Alpha
As the U.S. Federal Reserve prepares to raise policy rates for the first time in almost a decade, Latin America is in the midst of a sharp downturn with unemployment on the rise. In this context, many central banks across the region have kept interest rates low to support economic activity. But can monetary policy stay that way as global rates rise? What will the Fed liftoff imply for the region?
jlne.ws/1krXTn2

What Lies Ahead for the Bank of Japan
Michael Oyebamiji – Finance Magnates
Overnight, some economic data was released from Japan which was unfortunately disappointing. For example, adjusted trade balance figures came in at -0.36T when the market was expecting -0.7T, and exports (YoY) was 0.6% below the market forecast of 3.4%. The imports (YoY) figure came at -11.1% which is stronger than expected. Trade balance was also negative at -114B when 84B was expected, and industrial activity index (MoM) also dropped to -0.2%.
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The European Union, monetary and financial stability, and the Bank of England – speech by Mark Carney
Bank of England
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Currencies

Offshore Yuan Rises on Stability Bets as Xi Pushes Global Usage
Bloomberg
The yuan rose the most in almost a week in offshore trading on speculation Chinese authorities will prevent depreciation as President Xi Jinping promotes the currency’s use in global trade and finance during a trip to the U.K. this week.
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Solving the e-FX Liquidity Puzzle
Ryan Gagne – Finance Magnates
When it comes time to discuss liquidity from your e-FX provider, not all streams are the same. The largest and ever-changing puzzle for most liquidity consumers (i.e. downstream banks, brokers, trading firms, corporate treasury groups, etc.) is piecing together the “best” liquidity that suits their particular needs. Whether it is big chunky blocks of business or small and plentiful retail flow, not all providers supply the same liquidity.
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Exclusive: Falling Trader Profits and Rising Accounts Headline Q3 US Profitability Report
Ron Finberg – Finance Magnates
Data from US forex brokers showed that profitability once again declined during Q3 2015. Since peaking at 39.5% in Q2 2014, average profitability of retail traders at US forex brokers fell to 34.9% in Q3. The figure was compared to 36.2% in Q2. Using an average broker calculation (each broker’s results are weighted equally), profitability fell to 31.4% from the previous quarter’s level of 32.3%.
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Indexes & Index Products

Morningstar Announces Annual Indexes Market Classification Review
MarketWatch
Morningstar, Inc. MORN, -1.59% a leading provider of independent investment research, today announced its annual Morningstar Indexes market classification review. The Morningstar Index Committee is making two changes to the emerging markets category. Effective at the June 2016 semiannual reconstitution, Morningstar will reclassify Greece from the developed category to emerging markets and Morocco from the emerging markets category to frontier market.
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New China ETF Designed to Profit From Hong Kong-Shanghai Gap
Ye Xie – Bloomberg
The first Chinese asset manager to offer U.S. investors an exchange-traded fund tracking mainland equities has introduced a new ETF intended to profit from the almost 30 percent price difference between dual-listed stocks in Hong Kong and Shanghai.
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New Cash-Settled Options on Russell 1000 Indexes – Large-cap, Growth and Value
Matt Moran – CBOE Options Hub
On October 20 CBOE launched new cash-settled options on three indexes –
Russell 1000 Index (RUI) – is preferred by many investment managers as a broad-based index that represents approximately 92% of the total U.S. equity market.
Russell 1000 Growth Index (RLG) – measures the performance of those Russell 1000 companies determined to have higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Value Index (RLV) – measures the performance of those Russell 1000 companies determined to have a lower price-to-book value and lower expected growth values.
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FTSE Russell and JSE revitalise their SRI index series with new launches
ETF Strategy
FTSE Russell, a global index provider, has reunited with the Johannesburg Stock Exchange (JSE) to update the existing FTSE/JSE Africa Index Series. The collaboration involves the launches of the FTSE/JSE Responsible Investment Benchmark and a Top 30 Index, replacing JSE’s existing socially responsible investment index. These indices may be used as a reference for future tracking assets such as exchange-traded funds.
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MSCI to report carbon footprint of all global equities indexes
IR Magazine
Index provider MSCI will start publicly reporting the carbon footprint of its more than 160,000 global equities indexes to meet growing demand from investors following SRI strategies worldwide, the company says.
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Gold

Platinum fails to fill breach left by gold in South Africa
Ed Stoddard – Reuters
When South African miner Papi Soke went from gold to platinum, he thought he was trading a sunset industry for one with a brighter future.
This month, the National Union of Mineworkers (NUM) shop steward was one of over 800 workers laid off at the Eland platinum mine, closed by Glencore.
jlne.ws/1krOP1D

Gold, Silver Shine Again as Investors Add $393 Million to ETFs
Luzi-Ann Javier – Bloomberg
Precious metals are once again enticing investors.
After ignoring the assets for most of the year, investors added $393 million to U.S. exchange-traded funds backed by precious metals this month through Oct. 20, on course for the biggest monthly inflow since February. Gold and silver are gaining favor amid increasing expectations that the Federal Reserve could wait until next year to raise interest rates. Higher rates curb the appeal of precious metals because they don’t offer interest or yields.
jlne.ws/1krS89a

The illegal gold fuelling gang battles in South Africa (VIDEO)
BBC
The South African city of Johannesburg was built on enormous gold reef. Today, many of the mines have closed, but criminal gangs continue to work the disused and abandoned tunnels.
jlne.ws/1krRDf8

Photos show the once bustling life of a gold-mining town Bodie in California
Thomas Burrows – Daily Mail Online
Frozen in time, these eerie pictures hark back to the bustling life that once existed in this thriving North California gold-mining town.
Bodie used to be a busy gold-rush town that boasted a population of 10,000, as well as hotels, a jail, a bowling alley and around 200 restaurants.
Now the Wild West Town lies abandoned but many of the crooked buildings are still furnished with the personal belongings of their long-deceased owners.
jlne.ws/1krOFXW

Miscellaneous

Multinationals seek cover as EU begins tax avoidance battle
Vanessa Houlder, Christian Oliver and Jim Brunsden – Financial Times
Starbucks and Fiat took the heat on Wednesday. Now thousands of other multinationals doing business in Europe are asking a similar question: Will they, too, be caught up in a far-reaching Brussels crackdown on tax avoidance?
Much will depend on Margrethe Vestager, the EU’s competition commissioner, who on Wednesday declared that the companies’ highly-advantageous tax agreements with the Netherlands and Luxembourg, respectively, amounted to illegal forms of state aid.
jlne.ws/1krJFCW

Perfect temperature for economic success – 13C
Damian Carrington – The Guardian
The perfect average temperature for national economic success is 13C (55.4F), academics have discovered.
But the fundamental link they have revealed between a country’s economy and its temperature has led them to warn that the costs of unchecked climate change will be many times worse than previously thought.
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