First Impressions

A World of Opportunity Returns To London!
Doug Ashburn – JLN

MarketsWiki Education is headed back to London next month for another round of our World of Opportunity speaker series geared toward “the next generation of market participants” – college students, interns, young professionals and anyone interested in the financial markets.

We will hold three sessions, one on October 14 and two on October 15, all at Nasdaq, Woolgate Exchange, in the heart of the City’s financial district. The events feature executives from the CME Group, Nasdaq, London Metal Exchange and Euronext as well as fintech entrepreneurs, proprietary traders, bankers, regulators and more.

Registration is officially open!

With generous support from CME Group, the global premier sponsor of MarketsWiki Education, the London event comes at the heels of two wildly successful events in New York and Chicago in the summer of 2015. Our MarketsWiki Education talks feature speakers from around the financial industry who give short, 10- to 12 minute presentations that cover the entire scope of our markets.

Read the rest of the article at JohnLothianNews.com

Full info rundown at MarketsWikiEducation.com

Please help us spread the word throughout the U.K. about this FREE event series!

Quote of the Day

“The world economy is looking so troubled that if the US goes in for a very quick move in the middle of this I feel it is going to affect countries quite badly.”

Kaushik Basu, the World Bank’s chief economist, in the story, “World Bank chief economist warns Fed to delay rate rise”

Lead Stories

Obscure Hedge Fund Buys Billions of Dollars of U.S. Treasurys
Carolyn Cui and Gregory Zuckerman – WSJ
A little-known New York hedge fund run by a former Yale University math whiz has been buying tens of billions of dollars of U.S. Treasury debt at recent auctions, drawing attention from the Treasury Department and Wall Street.
Element Capital Management LLC, led by trader Jeffrey Talpins, has been the largest purchaser in dozens of government-bond auctions over the past 10 months, people familiar with the matter said. The buying is part of an apparent effort by the fund to use borrowed money to exploit small inefficiencies in the world’s most liquid securities market, a strategy that is delivering sizable profits, said people close to the matter.
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Exchanges vie for credit swaps trading
Joe Rennison – Financial Times
Intercontinental Exchange is hoping for more luck second time around as it relaunches an electronic trading platform that failed to gain traction at the start of 2014.
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Yanis Varoufakis: How Europe Crushed Greece
Yanis Varoufakis – NY Times
Since the beginning of Greece’s financial crisis in 2010, two prime ministers have been swept from office after they were forced to adopt an unfeasible package of austerity measures in exchange for a bailout from the troika, as the eurozone authorities — the European Commission, the European Central Bank and the International Monetary Fund — are known. It pains me to watch the same fate befall a third prime minister, my friend and comrade Alexis Tsipras.
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JPMorgan uses its might to cut costs in credit card market
David Henry – Reuters
JPMorgan Chase & Co. is cutting prices for a group of its credit card customers and getting Visa Inc to shoulder at least some of the burden of the lost revenue, underscoring how the largest U.S. bank’s size can help it hang onto business in fiercely competitive markets.
At stake are the billions of dollars that banks receive annually from consumer use of a credit card to pay a retailer. Chase, which generated roughly $3.6 billion of revenue last year from those fees, is increasingly occupied with fending off banking rivals like Citigroup Inc, as well as Silicon Valley companies such as Paypal Inc and Square Inc.
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The China-And-Emerging-Markets-Capital-Crisis That Wasn’t
Scott Cendrowski – Fortune
The end-of-summer meltdown in emerging markets, when the MSCI stock benchmark collapsed by 9% in August, created a bigger fear than just stock losses—chiefly that emerging countries are experiencing crippling capital outflows.
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Major banks’ commodities revenue down 25 pct in first half-report
Eric Onstad – Reuters
Global commodities-related revenue at the top 10 investment banks tumbled by a quarter in the first half of the year, due to a retreat in business from the power and gas sectors after last year’s surge, a consultancy said on Tuesday.
Revenue earned by leading banks from commodity trading, selling derivatives to investors and other activities in the sector fell to $2.6 billion from $3.5 billion in the same period of 2014, financial industry analytics firm Coalition said.
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EU Squeezed $7.8 Billion Greek Bridge Loan Via ESM Loophole
Rebecca Christie – Bloomberg
Who do you call on for 7 billion euros ($7.8 billion) at short notice to tide over a country like Greece for a month?
That was the dilemma euro-area policy makers faced in July as they raced to complete a bailout for Greece and prevent the country from defaulting on the European Central Bank.
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Banks Bond With Market Upheaval
John Carney – WSJ
The summer doldrums typically set a sleepy pace for bond markets in August. Not this year.
That could provide a welcome boost to third-quarter banking results, helping to make up for weakness elsewhere sparked by market turmoil.
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China Needs A Lot More Bankruptcy To Get Through This
Tim Worstall – Forbes
I noted a few days back that the most important structural change that China needs to make to get through its present troubles is to sort out the bankruptcy law. Or rather, the cultural phenomena around the idea itself, for the worst part of the Chinese economy is in the State Owned Enterprises. These SOEs are propped up by endless cheap loans from the state controlled (and often, local authority) banks to cover their ongoing losses. Many of them are, in effect, zombie companies and really do need to be closed down and their productive assets reallocated. And the way we do that is through the bankruptcy process. But we’ve now someone one upping me: the claim is that China itself needs to go bankrupt!
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Issuers Flock to the Eurozone
Christopher Whittall – WSJ
It’s not just U.S. companies that have rushed to eurozone bond markets to raise money this year.
Corporates from China to Japan, Israel to Australia are set for a record year of bond issuance in the region, as the European Central Bank’s easy-money policies lower the cost of borrowing in euros.
jlne.ws/1KCJlg7

Human decisions blamed for August’s stock market rout
Dan McCrum – Financial Times
Human decisions to sell stocks may have been behind the August rout for equity markets after all, with hedge fund and mutual fund managers selling in response to turbulence and fears for the Chinese economy.
The conclusion, based on work by strategists at JPMorgan, is a riposte to those who have attempted to blame esoteric trading strategies such as “risk parity” for the size and speed of the summer correction.
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Barclays Sells Loan Portfolio to Investor Group Led by Goldman Sachs
Chad Bray – NY Times
Barclays said on Monday that it had sold a portfolio of loans that included its secured lending business in Britain to a consortium of investors led by Goldman Sachs.
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Citigroup FX trader seeks ‘truth’ in wrongful firing case
Katie Martin and Jane Croft – Financial Times
A former Citigroup trader told a London employment tribunal on Tuesday that he was “not here to mud-sling” but to ensure “truth about foreign exchange at Citi is heard once and for all”, at the start of a wrongful dismissal case focused on the bank’s handling of the currencies-trading scandal.
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More Investors Betting Against Banking Stocks
Corrie Driebusch and Saumya Vaishampayan – WSJ
The late-summer market tumult has taken a hefty toll on bank shares, the latest sign of the uncertainty plaguing investments that are expected to benefit from rising interest rates.
The financial sector was one of the U.S. stock market’s hottest sectors through the second-quarter earnings season in July, as investors wagered that a Federal Reserve rate increase as soon as this month would open a period of increasing profits for banks, brokerages and insurers.
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Ex-Nomura Traders Charged Over Inflated Mortgage Bond Sales
Tom Schoenberg and Matt Robinson – Bloomberg
Three former Nomura Holdings Inc. traders were charged with defrauding investors by inflating the prices of mortgage-backed securities, the latest cases to come out of a U.S. crackdown on deceptive sales practices in the market for complex bonds.
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Exotic markets bring risks for savers
Adam Palin – Financial Times
Accessing global markets has never been easier for retail investors who, in a period of historically low yields, often look further afield for higher returns on their money.
Not only do fund managers offer products promising exposure to emerging and frontier markets — the most exotic investment destinations — but many retail investors now hold direct stakes in individual companies listed on far-flung stock exchanges.
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China’s new oil contract signals shift from Brent and US dollar
Andrew Critchlow – The Telegraph
Brent crude has been the global benchmark against which most oil is measured ever since the field from which it draws its name was discovered in the 1970s.
The first Brent futures were introduced in 1988 as a way for traders and refineries to smooth out volatile price movements and stabilise the market, which was being increasingly dictated by Middle East producers and the world’s largest consumers in the US.
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JPMorgan quits LME outcry trading ‘ring’
Emiko Terazono and Henry Sanderson – Financial Times
JPMorgan has become the latest bank to quit the “ring”, the top category membership at the London Metal Exchange that allows companies to trade directly on the open outcry trading floor.
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Shale’s dirty little capital market secret
Izabella Kaminska – Financial Times
That’s from Citi’s Richard Morse and Edward Morse (related?), plus team, on the way capital markets rather than cartels are driving commodity prices these days. The note is titled: “From Cartel to Capital Markets: Investors Join OPEC Shaping Oil Market Dynamics.”
This of course relates to our point on Monday that even the big commodity traders have been forced to turn to market-based funding in lieu of a dearth of bank finance in the sector.
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Russia Dismantles Fiscal Rules as Oil Volatility Rattles Budget
Lyubov Pronina, Ott Ummelas and Olga Tanas – Bloomberg
Step by step, Russia is undoing the budget policy assembled during the past decade as it tries to ride out turmoil on the energy market.
The government is halting the so-called budget rule a week after announcing plans to drop three-year fiscal plans in favor of a one-year program for 2016. That rule, which went into effect in 2013 and sought to cap public spending based on average long-term oil prices, may be modified, reinstated or dropped entirely, Economy Minister Alexey Ulyukayev told reporters Tuesday in Paris.
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Unbalanced but lucky, Britain hits an economic sweet spot
Jeremy Warner – The Telegraph
Even the darkest of clouds will have some sort of silver lining.
So when the financial crisis hit these shores, it was confidently predicted that despite its otherwise devastating consequences, it would at least force the UK economy to rebalance away from unsustainable-reliance on debt-fuelled consumption to a healthier form of growth based on investment and exports. The march of the financiers would be replaced by the “march of the makers”.
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Three takeaways from Modi’s big meeting with billionaires, bankers and babus
Madhura Karnik – Quartz
New Delhi’s No. 7 Race Course Road—Indian prime minister Narendra Modi’s official residence—today (Sept. 08) hosted some of the country’s most high-profile bankers, industrialists and policy makers.
Modi spent about three hours with the 40-member group, packed with cabinet ministers, key bureaucrats and bankers, corporate leaders and economists. Reserve Bank of India (RBI) governor Raghuram Rajan, Reliance Industries’ chairman Mukesh Ambani, Tata Group chairman Cyrus Mistry and State Bank of India chief Arundhati Bhattacharya were in attendance, the Economic Times newspaper reported.
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Central Banks

San Francisco Fed’s Williams Sees Rate Increase ‘This Year,’ if Risks Dissipate
Jon Hilsenrath and Michael S. Derby – WSJ
For much of 2015, John Williams, president of the Federal Reserve Bank of San Francisco, has projected a rosy U.S. economic outlook, seeing solid output growth, steady unemployment declines and an approaching need to increase short-term interest rates.
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China’s Forex Reserves Fall by Record $93.9 Billion on Yuan Intervention
Lingling Wei and Anjani Trivedi – WSJ
China’s foreign-exchange reserves plunged by a record amount in August, underscoring the strain endured by the country’s central bank as it intervened intensely to prop up the yuan.
The People’s Bank of China said Monday that its reserves fell by $93.9 billion, the biggest-ever monthly drop in dollar terms and the largest in percentage terms since May 2012. The decline in China’s foreign-currency reserves has accelerated, deepening a trend that illustrates the pressures of the country’s slowdown, rising capital outflows and expectations for monetary tightening in the U.S.
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Federal Republic Of Germany Becomes New Clearing Member Of EurexOTC Clear
Press Release – Mondovisione
Eurex Clearing, one of Europe’s leading clearinghouses and part of Deutsche Börse Group, has admitted another major participant for EurexOTC Clear – the German Bund represented by the Bundesrepublik Deutschland – Finanzagentur GmbH (the Federal Republic of Germany – Finance Agency). The Finance Agency, which has been responsible for the borrowing and debt management of the Federal Republic of Germany (Bund) and its funds since 2000, plans to be active as a direct clearing member of EurexOTC Clear on behalf of the Federal Republic in the fourth quarter of 2015.
jlne.ws/1LhFgbq

How Bank of China helps keep New York City’s commercial real estate market afloat
Heather Timmons – Quartz
New York City’s commercial real estate market is headed for its strongest year since before the 2008 financial crisis, thanks in part to foreign buyers who have been snapping up office properties and driving up prices.
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German finance minister says central banks powerless in face of too much debt
Reuters
German Finance Minister Wolfgang Schaeuble said on Tuesday that central bank policy could do little to help the economy when people and states take on too much debt.
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World Bank chief economist warns Fed to delay rate rise
Shawn Donnan and Sam Fleming – Financial Times
The US Federal Reserve risks triggering “panic and turmoil” in emerging markets if it opts to raise rates at its September meeting and should hold fire until the global economy is on a surer footing, the World Bank’s chief economist has warned.
Rising uncertainty over growth in China and its impact on the global economy meant a Fed decision to raise its policy rate next week, for the first time since 2006, would have negative consequences, Kaushik Basu told the Financial Times.
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Currencies

G-20 Countries Vow to Refrain From Currency Depreciation
Ian Talley and Emre Peker – WSJ
The Group of 20 largest economies on Saturday renewed their pledge to avoid depreciating their currencies to gain a competitive trading advantage as the fallout from China’s slowing economy roils international markets and threatens to stall a weakening global economy.
The effort to avert a so-called currency war comes on the heels of China’s yuan devaluation last month and as the International Monetary Fund plans to downgrade global growth prospects, warning that a confluence of downside risks threatens to slam the brakes on output.
jlne.ws/1XGBP7C

EM currency defences hold against sell-off
Roger Blitz – Financial Times
We are not yet at the stage with emerging market currencies reached by Frank Butler in Irving Berlin’s musical Annie Get Your Gun, when he sings: “My defences are down, I might as well surrender, for the battle can’t be won.”
Nonetheless, the sharp EM sell-off in currencies is triggering anxious debate about foreign exchange defences and raising pertinent questions: how strong are foreign exchange reserves across emerging markets, and how robust do they need to be?
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Why Hong Kong still needs to peg its currency to US dollar
Enoch Yiu – South China Morning Post
The Hong Kong Monetary Authority’s billion-dollar intervention to defend the Hong Kong dollar peg to the US dollar last week has reignited the debate on the city’s 32-year-old currency peg.
Bankers and analysts in general believe de-pegging from the US dollar is not an option. The only reason for the Hong Kong dollar to lose its peg to the US dollar would be to peg itself to the yuan and it’s too early for that.
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China’s central bank governor says yuan has stabilised against the dollar
Fergus Ryan – The Guardian
China’s central bank governor has told a meeting of the G20 that China’s currency has stabilised against the dollar after the country’s surprise announcement in August to revalue the yuan amid stock market turmoil.
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Yen Bulls Are Back: Morgan Stanley Ranks It Cheapest of All
Chikako Mogi and Hiroko Komiya – Bloomberg
An unlikely event is developing as the Federal Reserve moves closer to its first interest-rate increase in almost a decade: Yen bulls have re-emerged.
Japan’s currency is on course to avoid a record fourth-straight annual loss as a stuttering global economy revives haven demand and weakens the case for the Fed to raise rates more than once in 2015.
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Spot FX trading on Thomson Reuters platforms hits 5-month high
Jemima Kelly – Reuters
Daily spot trading volumes on foreign exchange platforms run by Thomson Reuters jumped almost 20 percent to a five-month high in August, the company said on Monday, as traders sought to profit from China-driven market volatility.
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No Floor Yet to Record-Low Lira Say Most Accurate Forecasters
Tugce Ozsoy – Bloomberg
Every day for the past week, Turkey’s currency has hit a new low, and all the signs are that trend will continue — for a while at least.
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Isle of Man, Tax Haven With Tailless Cats, Becomes Bitcoin Hub
Jeremy Kahn – Bloomberg
The Isle of Man is a strange place. Home to four-horned sheep, cats without tails, and perfectly preserved Victorian-era steam locomotives, this rock in the middle of the Irish Sea is perhaps best known for hosting the world’s most dangerous motorcycle race, the Manx TT.
It’s also a place where, after you take a 70-minute flight from London, a car service called The Lady Chauffeurs will meet you at the airport in a silver Mercedes-Benz S-Class. Imagine my surprise, then, when I’m greeted at arrivals by Keith, who, while courteous, impeccably dressed in a gray suit, and an able driver, is most decidedly not a lady. “All of our regular drivers are busy,” says an apologetic Nula Perren, who owns the company and has accompanied Keith to the airport. Not that I mind. I didn’t choose The Lady Chauffeurs for its ladies; I booked for the bitcoin.
jlne.ws/1OtePTl

Indexes & Index Products

China Just Killed the World’s Biggest Stock-Index Futures Market
Kyoungwha Kim – Bloomberg
Add the world’s biggest stock-index futures market to the list of casualties from China’s interventionist campaign to stop a $5 trillion equity rout.
jlne.ws/1PZAXp0

Why the S&P’s September Returns Are So Crucial
Todd Salamone – Schaeffer’s Research
With the S&P 500 Index’s (SPX – 1,921.22) end-of-August close below its 20-month moving average, the bears have a little more ammo to make their case. As we noted last week, monthly closes below this trendline during the past 40-plus years have historically preceded additional short-term weakness before the ship rights itself, at best, amid increased odds of prolonged weakness.
jlne.ws/1Ovi3Ww

Although August Was A Roller Coaster Ride For Investors ETFs/ETPs Listed Globally Gathered 20.8 Billion US Dollars In Net New Assets, According To ETFGI
Press Release – Mondovisione
Although August was a roller coaster ride for investors, ETFs/ETPs listed globally gathered US$20.8 billion in net new assets, marking their 19th consecutive month of positive net inflows, according to ETFGI’s preliminary ETF and ETP global insights report for August 2015.
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iShares expands ETF range using MSCI indexes
Emma Ann Hughes – FTAdviser
BlackRock has extended the iShares European smart beta range. iShares has launched three multi-factor ETFs: iShares FactorSelect MSCI World Ucits ETF, iShares FactorSelect MSCI USA Ucits ETF, and iShares FactorSelect MSCI Europe Ucits ETF.
jlne.ws/1M83Ktw

JPMorgan to Remove Nigeria From Emerging Market Bond Indexes
Paul Wallace – Bloomberg
JPMorgan Chase & Co. has excluded Nigeria from its local-currency emerging market bond indexes tracked by more than $200 billion of funds, after restrictions on foreign-exchange transactions prompted investor concerns about a shortage of liquidity.
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Taiwan Stock Exchange And Japan Exchange Group Link Markets With Cross-listing Of Index Products
Press Release – Mondovisione
Taiwan Stock Exchange Corporation (TWSE) and Japan Exchange Group, Inc. (JPX) will formally link their capital markets with the listing of the “Fubon TOPIX Leveraged 2X Index ETF” and the “Fubon TOPIX Inverse -1X Index ETF” on the Taiwan Stock Exchange on 10 September 2015. Fubon Asset Management will issue both ETFs.
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Gold

Platinum upgrade to golden reserve status seen as monetary alchemy
Ed Stoddard and Jan Harvey – Reuters
South Africa’s mining industry, unions and the government want to boost platinum’s sagging fortunes by promoting it as a central bank reserve asset, but upgrading the metal to gold’s coveted financial status will be an uphill struggle.
Obstacles to this attempt at monetary alchemy are many: the small size of the platinum market, gold’s long history as a store of value, and the inherent aversion to risk shared by most central bankers.
jlne.ws/1KCHx6B

The Modern Gold Market – An Enigma
Andrew Hecht – Seeking Alpha
While I am bearish on gold these days and I believe the price is going lower, I am still a believer in the true value of the precious metal. It has consistently intoxicated humankind throughout history. Gold has so many unique qualities. It is primarily a rare and lustrous metal. Demand for gold jewelry or adornments has been a constant over time. Industrial applications for gold are also an important component of the value for the metal. In those senses, gold is a commodity. Gold has been a means of exchange for thousands of years. Gold coins date back to earliest societies. While many claim to “own” gold, that ownership is temporary. Every ounce of gold produced in the history of the world still exists today. Gold outlives us all; we can only hold it for our lifetime and then it goes to another. Many individuals consider gold a part of their overall wealth.
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Miscellaneous

Comment: Give investors top priority in stock markets
Eric Noll – Financial Times
As US stocks ride the third-longest uninterrupted bull run in history, the question of whether equity markets are rigged continues to pervade the industry.
jlne.ws/1KCjF3e

FanDuel gets ahead of the game in US fantasy sports
Mure Dickie – Financial Times
There are not many UK offices where you can watch American football on overhead televisions as you work, but Nigel Eccles, chief executive and founder of fantasy sports company FanDuel, has good reason to want staff to keep an eye on gridiron action on the other side of the Atlantic.
jlne.ws/1KCJ64t

Queens and country: Victoria and Elizabeth’s reigns in numbers
Keith Fray – Financial Times
Elizabeth II will overtake Victoria as Britain’s longest-reigning monarch on Wednesday evening. But apart from the two monarchs’ longevity, how do their reigns compare? The FT’s statistics and graphics teams take a look below at the similarities and differences between the Victorian era and the “New Elizabethan” age, as well as how Elizabeth’s nation and subjects have fared in the 63 years since she was crowned.
jlne.ws/1PZAOlt

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