First Impressions

Summertime in Chicago

Summertime comes to Chicago on June 21. You would think we were already there with the big thunderstorms we have had this week and varying temperatures.

Summertime also means our Summer Intern Education Series. This year we have two such series; one in London and one in Chicago. The details for London are out. The dates are July 1 and 2 at King’s College. You can sign up your interns at

Our Chicago Series will be on July 29, 31 and August 5, 7 & 8. We will be announcing the venue shortly. We do have some confirmed speakers for Chicago already, including CBOE’s Ed Tilly, BOX’s Tony McCormick, ICE Board Member Jim McNulty, Spot Trading’s Steve Brodsky, S&P Dow Jones Indexes’ Jamie Farmer, CME’s July Holzritcher, NYSE AMEX’s Steve Crutchfield, KCG’s Chris Hehmeyer and Terry Duffy from the CME.

We are working on more speakers and will announce them as we confirm with them.

Since it is summertime, I have asked a couple of industry friends to edit my newsletter the next two weeks. Rick Lane of TT will be our guest editor next week and KCG’s Carl Gilmore the following week. Since Carl is owed a round of golf from a fundraiser auction he won more than two years ago, and the round has not been delivered yet, I would be a little worried if I was the person with the delivery issues. Being Guest Editor gives you a big bully pulpit.

From Jon Matte: Apparently, the Dog Days of Summer arrived a little early this year when it comes to financial news. I had so little to report today that I ended up trolling other financial news aggregators, but they were still reporting what little we found yesterday… So if you don’t mind, all you important movers-and-shakers out there, can you go and do something really interesting and exciting for us, so we can report it? Even if you’re only kidding, go ahead and announce that you’re getting new CEOs, or that you’ve all agreed to buy each other’s companies. I checked with Mary Jo White and she says it’s ok, just this once. Thanks!

Quote of the Day

“The Fed doesn’t see the risk of a bubble based on standard equity metrics.  Combine this and gloriously easy monetary conditions and the wonders of a new equity guidance may be an unexpected side effect. This is leaving some including myself with a sense of deep unease as we rush blindly forward into riskier assets.”

Sebastien Galy, a senior currency strategist at Societe Generale, in the story, “Living in Nonsensical Times, Dancing to the Piper’s Tune”.

Lead Stories

Living in Nonsensical Times, Dancing to the Piper’s Tune
Paul Vigna – MoneyBeat – WSJ
“We live in nonsensical times.” That was the subject line of the email that landed in our inbox from Sebastien Galy, a senior currency strategist at Societe Generale who writes a daily market commentary. That line curtly summed up a marketplace that is so fully under the aegis of central-bank largesse, and so convinced that protection will never waver, that the biggest fear in the market is not a recession, or rising oil prices, or malinvestment, or high unemployment, or a regional war in the Middle East, but complacency. That, Mr. Galy says, is nonsensical.

Traders dance to the tune of the Fed’s polka
Tracy Alloway in New York – Financial Times
Markets like these make you long for the days of Chuck Prince. The former Citigroup chief executive famously justified his bank’s willingness to undertake risky deals at the height of the credit bubble with the immortal line: “As long as the music is playing, you’ve got to get up and dance.”

‘Wall of Liquidity’ Headed to Emerging Markets
Daisy Maxey – MoneyBeat – WSJ
The fear that emerging markets will lack liquidity has been overstated, partly because the “wall of liquidity” beginning to come out of Japan has been ignored by the market, Franklin Templeton Investments fund manager Michael Hasenstab says.

Federal Reserve’s Bond-Buying Fades, but Stimulus Doesn’t End There
THE Federal Reserve is poised to keep purchasing large volumes of mortgage bonds, and potentially Treasury securities too, even after the likely conclusion of its prominent bond-buying program later this year.

New York Federal Reserve takes on key role in repo market
Tracy Alloway and Michael Mackenzie in New York – Financial Times
The Federal Reserve Bank of New York has emerged as the single largest player in an important segment of the short-term lending market that was at the epicentre of the financial crisis.

HEARD ON THE STREET: The Changing Face of Leverage
Richard Barley – WSJ
Move along, folks; not much to see here. That was broadly the message from Federal Reserve Chairwoman Janet Yellen on concerns about financial stability Wednesday. Investors should still take a closer look. In particular, Ms. Yellen said she didn’t see a “broad-based increase in leverage” that might be cause for concern.

What Will Argentina Do With Its Vultures?
Matt Levine – Bloomberg
On Monday, Argentina lost its appeal against Elliott Management in the U.S. Supreme Court. That means that, leaving aside this footnote,1 Argentina needs to either negotiate a settlement with Elliott over billions of dollars in unpaid debt in the next two weeks, or default on its current debts on June 30. This seems bad for Argentina, and it is. But in a weird way, it almost puts Argentina in a stronger negotiating position than Elliott.

Argentina’s comments put U.S. lawyers in awkward spot
At a hearing Wednesday afternoon in Manhattan, Argentina’s lawyer, Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, informed U.S. District Judge Thomas Griesa that Argentine officials “will be in New York next week” in order to begin negotiations with the hedge funds whose bond litigation has forced the country to the brink of a sovereign debt crisis.

Huge demand for Kenya debut Eurobond despite security risks
Kanika Saigal – Euromoney Magazine
Although terrorist attacks raged in Kenya at the beginning of the week, the country’s first Eurobond and the largest in the continent excluding South Africa was received well, highlighting sustained demand for emerging market debt.

HSBC ramps up bond trading platform
Anish Puaar – Financial News
HSBC is extending the reach of its electronic bond trading platform, which was introduced in response to the changing dynamics of the fixed income market.

Central Banks

Grading Yellen: She Deserves a ‘Solid A’
Steven Russolillo – MoneyBeat – WSJ
Fed Chairwoman Janet Yellen deserves a “solid A” for her performance at Wednesday’s press conference, according to one Wall Street strategist who was highly critical of her comments following her previous presser in March.

Another BOE Rate Setter Mulls Timing of Rate Hike
Paul Hannon – MoneyBeat – WSJ
For Bank of England policy maker Ian McCafferty, the time to vote for a rise in the benchmark interest rate is drawing near. In a speech Thursday, Mr. McCafferty said the decision on whether to leave the rate at a 320-year low, or nudge it higher, is “becoming more balanced” as a steady flow of data and surveys indicates strong U.K. economic growth.

BOJ Becomes Top Holder of Japan Government Bonds
The Bank of Japan has become the biggest holder of the country’s sovereign debt for the first time, showing how the central bank’s aggressive monetary easing has transformed the debt market.

Quantitative Easing Not Needed Yet, ECB Official Says
Tom Fairless – WSJ
The European Central Bank could carry out large-scale asset purchases, known as quantitative easing, if inflation in the single currency bloc were to remain low for a protracted period, but such a policy isn’t needed at present, a top ECB official said Friday.


Driving Competitive Advantage Through FX TCA
Michael Sparkes – TABB Forum
Transaction Cost Analysis has proven to add alpha to the execution process, and the TCA focus is now shifting beyond equities, with currency trading firmly in the spotlight. But it is not simply a case of applying the equities model to FX.

Michael P. Tobin Named Chief Technology Officer of Curex Group
The Curex Group announced today that Michael P. Tobin has been appointed its new Senior Managing Director and Chief Technology Officer, a new position at this New York, NY based institutional foreign exchange, execution and index data company.


Shanghai to Start International Gold Trading in 4Q
China, the world’s biggest gold user, will start international gold trading in Shanghai’s free-trade zone in the final quarter of this year, according to a city government official.

Silver Fix Knock-Out Stage Starts Friday
Francesca Freeman and Laura Clarke – MoneyBeat – WSJ
England vs Uruguay isn’t the only big square-off being talked of in London’s finance district. On Friday, there’ll be a seven-way battle among companies pitching alternatives to the ‘silver fix’, the process of setting prices of billions of dollars in transactions every year.

Gold Futures Rally, Posting Biggest Daily Gain in Nine Months
Ira Iosebashvili – WSJ
Gold prices posted the biggest daily gain in nine months on Thursday, driven by investors who were caught flat-footed by the Federal Reserve’s outlook for continued low interest rates.

Morning MoneyBeat: Gold’s Perplexing Rally
MoneyBeat – WSJ
In an otherwise quiet time in the markets, gold prices have been anything but tranquil immediately following this week’s Fed meeting. Gold rallied 3.3% on Thursday, its best one-day performance in nine months, as traders reversed bearish bets on the precious metal.


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