First Impressions

Patrick Birley, CEO of ISDX – Variety is the Spice of Life
JohnLothianNews.com

“If you’re not happy with what you do, change. Do something else. Take the risk and get out there. “

Patrick Birley, CEO of ISDX, discusses his numerous career path transitions. Starting with an entrepreneurial experience for an exchange in Africa, Birley highlights the success he achieved and how he thought he would be unstoppable in his career. After a life changing event that forced him to reconsider the safety of his family, Birley returned with his family to the UK and ended up switching from several other corporate and entrepreneurial positions, until finally landing where he is today. In between those jobs, Birley became involved in the brewing industry before returning to the financial world. All these various experiences helped shape both Birley’s personality and professional attitude. His overall message is to take advantage of new opportunities and be willing to try something else if you don’t enjoy what you currently are doing.

Watch the video »

Quote of the Day

“Market fragmentation and liquidity constraints in a large part of the bond market make managing fund-flow volatility particularly challenging.”

Sivan Mahadevan, a credit strategist at Morgan Stanley in the story, “New Junk-Bond Derivatives Are Hot as Traders Get Creative”.

Lead Stories

New Junk-Bond Derivatives Are Hot as Traders Get Creative
Lisa Abramowicz – Bloomberg
When it gets tough to maneuver in the junk-bond market, traders can either give up or get creative. Many of them are opting for creativity these days.
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Bill Gross Is a ‘Philosophical Nomad’ With Some Thoughts on Inflation
MoneyBeat – WSJ
So that’s what they meant by unconstrained! Bill Gross, the legendary bond investor who recently left Pacific Investment Management Co. to run a new “Global Unconstrained Bond Fund” at Janus Capital Group Inc.JNS -1.33%, put out his monthly investment outlook Monday, and the reaction from many readers was one of puzzlement.
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JPMorgan Stands With Deutsche Bank on Chile Rate Bluff
Sebastian Boyd and Eduardo Thomson – Bloomberg
Chile’s central bank has managed to convince almost all traders and economists that it’s brought the world’s most aggressive interest-rate cuts to an end. Deutsche Bank AG and JPMorgan Chase & Co. are calling the bank’s bluff.
Gustavo Canonero and Vladimir Werning, the firms’ respective economists, are the only forecasters among the 11 tracked by Bloomberg predicting more reductions in borrowing costs over the next year. Their view also contrasts with traders in the swap market, who are pricing in a more than 90 percent chance policy makers will keep rates unchanged in that span.
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Euro Woes Pressuring Eastern EU States Into More Easing
Agnes Lovasz and Andra Timu – Bloomberg
Low inflation, flagging growth, and the European Central Bank’s stimulus bias will probably force eastern members of the European Union to cut interest rates to record lows this week.
Romania took the first step today, lowering its benchmark rate to 2.75 percent from 3 percent. Poland will reduce rates tomorrow, while Czech officials will maintain their own benchmark close to zero a day later as they ponder their stance on stemming gains in the koruna, economists predict. The ECB meets Nov. 6 to deliberate on monetary policy.
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U.S. Government Bond Yields Rise to Highest Level in Nearly a Month – WSJ
Min Zeng – WSJ
Yields on U.S. Treasury bonds rose to the highest level in nearly a month on Monday as an upbeat U.S. manufacturing report raised some concerns that the Federal Reserve may raise interest rates sooner than investors expect.
In late afternoon trading, the benchmark 10-year note was 4/32 lower, yielding 2.348%. Yields rise as prices fall.
It was the yield’s highest closing level since Oct. 7. The yield remains at very low levels. It was 3% at the start of 2014.
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Central Banks

Fed’s Fisher: FOMC ‘Neutered’ Pledge To Keep Rates Low For ‘Considerable Time’
Michael S. Derby – MoneyBeat – WSJ
Federal Reserve Bank of Dallas President Richard Fisher had been widely expected to dissent at last week’s central bank meeting if the Fed continued to pledge interest rates would stay low for a “considerable time” to come, which it did. Mr. Fisher held fire and he used a speech Monday to explain why.
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Obama has first one-on-one chat with Federal Reserve chief
Justin Sink – TheHill
President Obama and Federal Reserve Chairwoman Janet Yellen discussed the long-term outlook for the U.S. economy in their first one-on-one meeting since she took charge at the central bank, the White House said Monday.
The pair also discussed the president’s upcoming trip to Asia and Australia, which is expected to include discussion of a Pacific trade deal and a meeting of the G-20 economies.
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Fed’s Fisher: Yellen is ‘impressively balanced,’ sees more hawkish Fed
Jeff Cox – CNBC
Dallas Federal Reserve Richard Fisher said he voted in favor of the October Open Market Committee statement in part because of a more hawkish tilt in the sentiment, according to prepared remarks for a speech he is delivering Monday afternoon.
However, he said the third leg of the Fed’s monthly bond-buying program never should have happened and ended up posing economic risks that weren’t worth the benefits.
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The Unwritten Mandate: Is Financial Stability Worth The Fed’s Time?
Christian Ackmann – NASDAQ
When the Federal Reserve System was created in 1913, Congress declared only two main objectives: maximum sustainable employment and stable prices. These two objectives are often called the Fed’s “dual mandate.” Given these simple goals, it may have been surprising when the Federal Reserve lent trillions of dollars to individual institutions during the recent recession.
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Currencies

Big data comes to FX
Paul Golden – Euromoney Magazine
The analysis of structured, semi-structured and unstructured information from multiple sources, commonly referred to as ‘big data’, could improve FX pricing as well as reduce the potential for regulatory infringements, according to technology experts.
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JPMorgan Faces U.S. Criminal Probe Into Currency Trading
Hugh Son and Michael J. Moore – Bloomberg
JPMorgan Chase & Co. (JPM) said it faces a U.S. criminal probe into foreign-exchange dealings and boosted its maximum estimate for “reasonably possible” losses on legal cases to the highest in more than a year. The shares fell in New York.
The firm is cooperating with the criminal investigation by the Department of Justice as well as inquiries by regulators in the U.K. and elsewhere, it said yesterday in a quarterly report. The largest U.S. bank said it might need as much as $5.9 billion to cover losses beyond reserves for legal matters, up $1.3 billion from the end of June, and the most since since mid-2013.
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South Korea battling for RMB spoils
Rob Hartley – Euromoney Magazine
Backed by its robust trading relationship with China, the east Asian nation is the latest fledgling offshore renminbi hub. Market participants shed light on South Korea’s renminbi bid as internationalization of the Chinese currency gathers pace.
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Norway’s Krone Plunges as Brent Crude Price Hits Four-Year Low
Saleha Mohsin – Bloomberg
The Norwegian krone fell more than 1 percent against the euro as Brent crude prices hit a four-year low after Saudi Arabia cut the cost of its crude oil to the U.S.
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CFTC’s Mark Wetjen Says Regulators Should Act to Help Bitcoin Fulfill Potential – WSJ
Andrew Ackerman – WSJ
Bitcoin and other virtual currencies have great potential to reshape the financial-services industry, but policy makers should act quickly to establish a framework for their regulation, a top U.S. commodities regulator said.
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Indexes & Index Products

LGIM suffers UK index outflows while LDI business grows
Anna Fedorova – Investment Week
Legal & General Investment Management has seen significant outflows from its UK index funds in the first nine months of the year, which had a negative impact on overall inflows into the business.
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No. 1 gold ETF sees biggest monthly outflow this year in October
Jan Harvey – Reuters
The world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Shares, saw an outflow of over $1 billion of metal last month as investors lightened holdings in anticipation of a further price drop from current four-year lows.
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UPDATE 1-U.S. exchange-traded products drew $27.5 bln in Oct. -BlackRock
Ashley Lau – Reuters
Investors poured $27.5 billion into U.S.-listed exchange-traded products in October, with a large part of that money going into fixed-income funds for the biggest monthly inflow so far this year, according to data from BlackRock Inc.
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Guest post: Russia ETF inflows strong in spite of turmoil
Relte Stephen Schutte, Markit – Financial Times
In spite of what you might expect to be a “perfect storm” scenario for Russian stocks, inflows of investment capital into Exchange Traded Funds (ETFs) – investment funds traded on stock markets much as a stock would trade – have remained strong.
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Gold

Investec’s Mundy: Gold has hurt us, but we are holding on
Anna Fedorova – Investment Week
The head of Investec Asset Management’s value team, Alastair Mundy, is holding on to his out of favour gold positions on expectations of an upcoming bear market.
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Gold Slump Unnerves Investors Amid Rating Threat: Canada Credit
Gerrit De Vynck – Bloomberg
Investors are losing confidence Canadian gold miners will be able to weather the metal wallowing at a four-year low without damage to their credit ratings.
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Changing Global Silver Fix Was Just the Start for Crowell
Nicholas Larkin – Bloomberg
Ruth Crowell had been in her job just four months when two of her industry’s century-old traditions began to crumble.
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