First Impressions

Steve Tucker, S&P Capital IQ – Dynamic Data: How markets use and consume information
JohnLothianNews.com

“If you think about it…nothing happens in our industry without [data]. There are no fiscal decisions made, there are no financial trades made, there are no mergers and acquisitions.”

Steve Tucker, managing director, global head of enterprise and real-time solutions for S&P Capital IQ, discusses the importance of data and how the digitalization of data has affected today’s financial industry. Tucker gives a humorous opening example of two hamsters his son acquired, and how his son did not realize that he had a male and female hamster. After discovering a new set of baby hamsters in their household, Tucker relates this experience to how important knowing your data is, and then calculates the possible number of combinations of breeding hamsters his family could end up with. Tucker also discusses new and innovative ways firms are tapping into data and what the future of markets and trading holds for new graduates.

Watch the video »

Quote of the Day

“There has been a lot of speculation and very little clarity about what will happen. By now, investors expected some more signals and certainties. That has been having a direct impact on trading.”

Camila Abdelmalack, an economist at brokerage CM Capital Markets in the story, “Brazil’s Bondholders Bemoan Rousseff’s Lack of Urgency”.

Lead Stories

Raising rates mysteriously
Izabella Kaminska – Financial Times
Paul Krugman commented this week that despite all the talk about imminent rates raises, the Fed doesn’t actually have much reason to raise rates just yet.
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Pimco could withstand extra $300-$350 billion outflows over two years: Morningstar
Jennifer Ablan – Reuters
Pacific Investment Management Co can withstand additional outflows of about $300 billion to $350 billion over the next two years before its portfolio management operation is impaired, according to research firm Morningstar Inc on Tuesday.
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Junk Bond Risks Escalate With Leverage Back to ’08 Levels
Matt Robinson and Katherine Chiglinsky – Bloomberg
The riskiest corporate debtors in the U.S. aren’t growing fast enough to pay down their borrowings, increasing the risk for bond investors at a time when valuations are already at about record highs.
That’s the conclusion of Deutsche Bank AG, which estimates that the biggest jump in earnings in almost three years may be coming too late for speculative-grade borrowers as the amount of debt on balance sheets climbs back to levels seen in early 2008 before the financial crisis. To make matters worse, their ability to make interest payments is about where it was in 2007, even as the Federal Reserve has held its benchmark rate close to zero.
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Brazil’s Bondholders Bemoan Rousseff’s Lack of Urgency
Bloomberg
In her victory speech after she was re-elected last month, President Dilma Rousseff promised to take “urgent” steps to revive Brazil’s languishing economy. Bondholders are losing patience.
The nation’s real-denominated notes have lost 4.1 percent in dollars since Oct. 24, the last trading day before Rousseff defeated her opponent to win a second term. The slump is more than twice the 1.7 percent average drop in emerging markets.
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Five reasons to return to high yield bonds
Anna Fedorova – Investment Week
The high yield bond sector saw its worst third quarter for three years, but the sharp falls are a good entry point for investors, according to Legg Mason affiliate Western Asset.
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Central Banks

BOE Dismisses Chief Foreign-Exchange Dealer
Chiara Albanese – WSJ
The Bank of England has dismissed its chief foreign-exchange dealer for breaching internal policies, a spokesperson said, but the central bank said it wasn’t involved in any of the improper activity in the currencies market that has led to a series of fines for banks in the market
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Carney Says He’s No Loon as Label Gets Policy Makers Chuckling
Fergal O’Brien – Bloomberg
Mark Carney is no loon, though the idea amuses his deputy governor.
“I’m a pragmatist, that’s what I am,” the Canadian-born Bank of England governor told reporters in London today when asked if — instead of the traditional hawk and dove tag — he is a loon, the aquatic bird that appears on Canada’s one-dollar coin.
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Bank of England says FX investigation finds no BoE wrong-doing
Reuters
The Bank of England said an investigation commissioned by its oversight committee had found no evidence that any BoE official had been involved in unlawful or improper behaviour in relation to a foreign exchange trading scandal.
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Currencies

U.S. Federal Reserve investigating bank conduct in forex markets
Reuters
The U.S. Federal Reserve is investigating possible improper conduct in foreign exchange markets by large banking institutions, a spokesman said on Wednesday.
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Hong Kong scraps renminbi-conversion caps
Financial Times
Hong Kong residents will soon be allowed to buy and sell as much renminbi as they want after the city ditched long-standing currency conversion limits.
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Six Banks to Pay $4.3 Billion in First Wave of Currency-Rigging Penalties
Suzi Ring, Liam Vaughan and Jesse Hamilton – Bloomberg
Regulators in the U.S., Britain and Switzerland ordered six banks to pay about $4.3 billion in the first wave of penalties since authorities began a global probe into the rigging of key foreign-exchange benchmarks last year.
The Office of Comptroller of the Currency fined Bank of America Corp. $250 million, while JPMorgan Chase & Co. and Citigroup Inc. will pay $350 million each, according to a statement. That adds to $3.3 billion of penalties announced earlier today by the U.S. Commodity Futures Trading Commission, Britain’s Financial Conduct Authority and the Swiss Financial Market Supervisory Authority.
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Indexes & Index Products

First China onshore bond ETF launches in the United States
Reuters
U.S. investors can now gain direct access to China’s onshore bond market through a new exchange-traded fund that invests in a broad swath of the country’s swelling fixed-income market, which has largely been closed off to foreigners.
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ISE ETF Ventures Launches the ISE Cyber Security Index (HXR)
ISE ETF Ventures announced today the launch of the ISE Cyber SecurityTM Index (ticker: HXR), an index that allows investors to quickly take advantage of both event-driven news and long term economic trends in the cyber security and information technology space.
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Gold

Gold Swings as SPDR Assets Post Longest Losing Streak in a Year
Glenys Sim – Bloomberg
Gold swung between gains and losses as investors weighed whether U.S. interest rates will rise and after assets in the largest exchange-traded product backed by the metal posted the longest slump in a year.
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End of gold fix heralds shift for London
Henry Sanderson – Financial Times
For centuries London’s precious metals markets have operated themselves. Gold has been moved between hidden vaults in the city, to customers from across the world. To this day, no one knows how much gold changes hands.
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Swiss Central Bank Speaks Out Against Gold Initiative
John Revill – WSJ
The head of Switzerland’s central bank has warned that maintaining stable prices would be harder to achieve if the Alpine country votes to require the bank to keep a minimum amount of gold in its vaults.
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LBMA-Shaken gold bulls learn to accept ‘new normal’
Clara Denina – Reuters
Blinking from sweeping reform on price benchmarks, even the most die-hard gold enthusiasts accepted the market’s glory days had faded for now, as the bullion industry’s annual conference agreed prices would nurse losses over the next year.
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Comex copper steals march over LME in battle for Asia trade
Melanie Burton – Reuters
Asian traders are increasingly choosing CME Group Inc over the London Metal Exchange (LME) for buying and selling copper, as they seek to cut costs and complexity of trade.
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