First Impressions

James McNulty, Chairman, NYSE Liffe – An Integrated Approach To Corporate Governance
JohnLothianNews.com

“What I’d like to do today is talk to you about taking your career right now and rolling it forward 30 years.”

James McNulty, chairman of NYSE Liffe, breaks down the relationship between corporate boards and shareholders. He compares the conflicts that can arise between the two parties, strategies to create compromises and each of the roles both sides have. McNulty also touches on success strategies and establishing short and long term success. He also shows an example formula for creating a common language and metrics for the governing board. McNulty concludes by saying that when things become difficult, the strongest possible governance is desired in order to gain the confidence of the market.

Watch the video »

Quote of the Day

“Markets fear a divergence growing among central banks as Mario is no longer magic amidst concerns that his tool box is empty. Other central bank figures are still due to talk so bumper cars may continue.”

Art Cashin at USB in the story, “Market Faith in Central Bank Omniscience Being Tested”.

Lead Stories

Market Faith in Central Bank Omniscience Being Tested
Paul Vigna – MoneyBeat – WSJ
Everybody knows the Fed is shutting down its massive bond-buying program, QE3, this month. Until recently, the market had handled that knowledge exceedingly well. Now the final month is here, and a key reason underlining the market’s aplomb seems to be crumbling, and the markets are trembling along with it.
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Junk Bond Funds Attract $1.3 Billion in Latest Week
Katy Burne – WSJ
Investors plowed $1.3 billion into high-yield bond funds in the week ended Wednesday, fund tracker Lipper said, the latest sign of investors’ search for income amid paltry interest rates around the world.
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Pimco Not Increasing Cash to Meet Fund Redemptions
Margaret Collins – Bloomberg
Pacific Investment Management Co., the $2 trillion fixed-income manager, said it isn’t increasing cash-like holdings in its flagship bond fund to meet client redemptions.
“We have not ramped up portfolio liquidity in anticipation of outflows,” Scott Mather, one of three managers of the $201.6 billion Pimco Total Return Fund (PTTRX), said in an update to clients posted on its website.
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Bernanke Testifies That A.I.G. Had No Better Offer
Aaron M. Kessler – NY Times
Ben S. Bernanke, a former chairman of the Federal Reserve, was not the most cheerful of witnesses on Thursday as he took the stand in the lawsuit over terms of the 2008 bailout of the insurance giant American International Group.
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TeraExchange Completes First Bitcoin Derivatives Trade On Regulated Exchange
TeraExchange announced today the first bitcoin derivative transaction to be executed on a regulated exchange. The initial trade was completed between digitalBTC, the world’s first bitcoin-focused company to commence trading on a major stock exchange, and a hedging counterparty.
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An extraordinary state of ‘managed depression’
Martin Wolf – Financial Times
Suppose we had been told two decades ago that a time would come when the highest short-term intervention rate implemented by the four most important central banks of the high-income countries was just half a per cent. Suppose, too, we were told that the European Central Bank was down to 0.05 per cent, after a brief and unsuccessful effort to raise the rate from 1 per cent to 1.5 per cent in 2011.
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Germany’s Schaeuble says ‘writing checks’ won’t fix Europe
Krista Hughes – Reuters
German Finance Minister Wolfgang Schaeuble said on Thursday more government spending was a wrong cure for the euro zone’s weak growth and dismissed the prospect of recession for Europe’s biggest economy.
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Broad reversal of post-Fed moves augurs tricky months ahead
James Mackintosh – Financial Times
Sometimes central banks truly surprise the markets, as when the US Federal Reserve opted not to start the taper in September last year. Other times markets are shocked: shocked to find that a central bank has made a statement of the obvious – and the resulting price moves reveal a lot more about markets than about policy makers’ intentions.
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Central Banks

ECB’s Draghi says expects lending to pick up soon in 2015
Reuters
European Central Bank President Mario Draghi said on Thursday he expects bank lending, a key impediment to growth in the euro zone at the moment, to pick up early next year.
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Fed Aim Off Target as Inflation Descends Near Danger Zone
Craig Torres – Bloomberg
Federal Reserve officials are hunting for new tactics to raise price increases to their target as slowing global growth, cheaper commodities and flat wages sound warnings that inflation is descending toward the danger zone.
The Fed needs a clear strategy for getting the inflation rate higher after falling short of its 2 percent target for 28 consecutive months.
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The Federal Reserve is set to stop buying bonds, something that’s roiled markets before
Fox Business
In less than three weeks, a big change is nearly certain for investors. Few will be surprised, but some will be nervous.
On Oct. 29, virtually all economists expect the Federal Reserve to announce the end of its program that bought bonds every month in order to boost the job market. The purchases are widely credited for fueling price increases of all kinds of investments.
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Draghi Clashes With Schaeuble Over Steps for Europe
Stefan Riecher, Rainer Buergin and Simon Kennedy – Bloomberg
European Central Bank President Mario Draghi and German Finance Minister Wolfgang Schaeuble differed over what further steps to take if the euro-area economy keeps weakening as the region came under renewed foreign pressure to revive growth.
As the International Monetary Fund’s annual meeting in Washington began, Draghi pledged anew to loosen monetary policy more if needed and called on those governments with the room to ease fiscal policy to do so. By contrast, Schaeuble warned against U.S.-style quantitative easing and urged continued budgetary discipline.
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Bank Of England: Record Of Financial Policy Committee Meeting Held On 26 September 2014
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Currencies

What Happens to the Ruble When Bank of Russia Stops Trading
Andrey Ostroukh – MoneyBeat – WSJ
The Bank of Russia is spending hundreds of millions of dollars a day in the market to prop up the plummeting ruble. But the fight lasts only until 6 p.m. Moscow time, after which the central bank’s intervention-desk traders go home and the ruble is allowed to float freely until the next day’s session.
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IFC plans offshore RMB duration play
Sid Verma – Euromoney Magazine
Buoyed by its Indian success, the World Bank’s private-sector arm the International Finance Corporation (IFC) has set its sights on further extending the offshore renminbi curve.
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U.K. Treasury to Sell Debut Renminbi Bond
Ben Edwards and Chiara Albanese – WSJ
The U.K. government moved a step closer on Thursday to becoming the first country other than China to issue bonds in China’s yuan.
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FCA forex probe to accuse banks of control failings
Caroline Binham, Daniel Schäfer and Martin Arnold in London – Financial Times
The UK’s financial regulator has accused six banks of system and control failures in their foreign exchange businesses as its probe over the alleged rigging of global currency markets heads towards a showdown.
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Is the renminbi set to slump?
James Kynge – Financial Times
China corruptionEmerging market (EM) currencies have tumbled against the US dollar over the past three months – with a single exception. Not only has the renminbi resisted kowtowing to the resurgent greenback, it has strengthened against it even as the currencies of its BRIC counterparts
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CFTC Acknowledges Bitcoin’s Long-Term Promise at DC Hearing
Tanaya Macheel – www.coindesk.com
The US Commodity Futures Trading Commission (CFTC) held a meeting yesterday in Washington, DC, to discuss bitcoin as it relates to the agency’s role as the country’s chief futures and options regulator.
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BitBeat: BitFury Pockets $20 Million, Adding to Big VC Inflows for Bitcoin
MoneyBeat – WSJ
Thursday brought the news that bitcoin mining company BitFury has raised $20 million in new funding. That followed Tuesday’s announcements that wallet provider Blockchain had pulled in over $30 million in venture-capital seed funding, and bitcoin derivatives provider SolidX had raised $3 million.
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Indexes & Index Products

Vanguard winning global ETF battle in 2014
Joe McGrath – Financial News
Vanguard had the five best-selling exchange-traded products globally in the first nine months of the year, racking up some $23.6 billion of inflows between the funds.
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Chart o’ the Day: Which ETFs are we buying this year?
Joshua M Brown – thereformedbroker.com
BlackRock’s latest monthly report on flows in the exchange traded product (ETP) space has some great information in it. The headline is that, through September, inflows for all ETPs totals $124.2 billion, putting us within reach of 2013’s full-year intake of $190.2 billion.
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Gold

Gold Posts Longest Rally Since June as Rate Concerns Ease
Joe Deaux and Laura Clarke – Bloomberg
Gold prices capped the longest rally since June amid easing concern that the Federal Reserve is close to raising interest rates, reviving demand for the metal as an inflation hedge.
More than $1.2 billion has been added to the value of exchange-traded products backed by bullion this week as prices rebounded. The 30-day historical volatility for futures traded in New York climbed today to the highest in more than a month amid renewed investor interest.
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