First Impressions

Big Picture: Sandor Says Look Beyond US For Air And Water Markets

Richard Sandor is one of the pioneers in financial derivatives and the environmental markets world as founder of the Chicago Climate Exchange. Now with his second book, Sustainable Investing And Environmental Markets, Sandor says this asset class has come a long way over the past 12 years but has a long way to go from here.

“I think we’ve made enormous progress,” he says. “You wouldn’t necessarily believe it was true because of the lack of federal action in the the United States. But I think that would be naive. In fact, you have proposals pending by the EPA that suggest there may be cap-and-trade.”
Watch the video »

***DA: We published this video last week, sandwiched in between our coverage of OIC and the WFE conferences. It is a great interview with Doc Sandor, so we want to make sure it gets its day in the sun.

Quote of the Day

“If another financial crisis happened tomorrow – and that’s still a real risk – nobody doubts that megabanks would be calling on the federal government to bail them out again. Our legislation makes common sense reforms to the Fed’s emergency lending powers to protect taxpayers.”

Sen. David Vitter in the story, “Fed Bailouts, Goldman Commodities Business Targeted in Bill”.

Lead Stories

Senate Leaders Reach Deal to Advance Fast-Track Trade Measure
Heidi Przybyla and James Rowley – Bloomberg
U.S. Senate leaders agreed on a deal to move forward with President Barack Obama’s legislation to speed approval of trade agreements following a one-day rebellion by Democrats.

There’s a Tourist Problem in $7.8 Trillion of U.S. Company Bonds
Lisa Abramowicz – Bloomberg
Wondering what the next shoe to drop in the $7.8 trillion U.S. corporate-bond market might be? The answer could be a dollar rout that’d prompt foreign buyers to bail.

Foreign Investor Access to Onshore Chinese Bond Markets Grows
S&P Dow Jones Indices Indexology Blog
China continues to broaden foreign investor access to their onshore bond market. Luxembourg is the latest country being granted an RQFII quota by the People’s Bank of China, followed Canada, Germany, Qatar and Australia. According to the data published by State Administration of Foreign Exchange (SAFE) on April 29, 2015, the approved RQFII investment quota reached CNY 363 billion, representing a 22% increase from December, 2014. The number of the qualified institutions also rose from 93 to 121.

U.S. Set to Rip Up UBS Libor Accord, Seek Conviction
Tom Schoenberg – Bloomberg
The U.S. Justice Department is set to rip up its agreement not to prosecute UBS Group AG for rigging benchmark interest rates, according to a person familiar with the matter, taking a new step to hold banks accountable for repeat offenses.

What If Lehman Brothers Had Been Lehman Sisters?
Mayra Rodriguez Valladares – American Banker
How can we reform banks so they better serve society? It’s telling that it took a conference organized by women and featuring an all-female lineup of speakers to focus on this question. The 18 women speakers at the Institute for New Economic Thinking’s conference in Washington, D.C., encouraged people in the field to think creatively about bank reform.

Democrats Greet Shelby Banking Bill With Skepticism; Administration fears erosion of Dodd-Frank protections
Ryan Tracy and Victoria McGrane – Wall Street Journal
An opening gambit by Senate Banking Committee Chairman Richard Shelby (R., Ala.) to ease regulatory restrictions on smaller banks and increase scrutiny of the Federal Reserve was met with skepticism by Democrats, portending a rough road for a bill that would make the most significant changes to financial regulation since the 2010 Dodd-Frank law.

Central Banks

Fed Bailouts, Goldman Commodities Business Targeted in Bill
Christopher Condon and Ian Katz – Bloomberg
Senators Elizabeth Warren and David Vitter introduced legislation to limit the Federal Reserve’s emergency-lending powers, adding impetus to congressional efforts to rein in the central bank.

Federal Reserve awards $92.13 billion in reverse repos
The Federal Reserve on Wednesday awarded $92.13 billion of overnight fixed-rate reverse repurchase agreements to 37 bidders at an interest rate of 0.05 percent, the New York Fed said on its website.

ABN Amro chairman apologises after executive pay reversal
Martin Arnold – Financial Times
The chairman of ABN Amro has apologised for the uproar over executive pay that is disrupting the Dutch bank’s planned privatisation.

Fed Officials Tell Markets the Training Wheels Are Off – Real Time Economics
Michael S. Derby – Wall Street Journal
After years of telling markets what to expect on the interest-rate front, Federal Reserve officials are telling traders and investors to figure out the outlook on their own. The influential presidents of the New York and San Francisco regional Fed banks seemed eager Tuesday to offer lessons in how market participants should be thinking about central bank policy

Christie: Fed partly to blame for U.S. income inequality
Lisa Lambert and Amanda Becker – Reuters
In unusual remarks for a moderate Republican who may run for president, New Jersey Governor Chris Christie said on Tuesday the Federal Reserve deserved part of the blame for a widening gulf between the rich and the poor.

Hiring a New York Fed Chief Could Take a While
Kate Davidson – Wall Street Journal
Senate Banking Committee Chairman Richard Shelby (R., Ala.) wants to add one more name to the long list of financial agency nominees the Senate has the power to approve or reject: the president of the New York Federal Reserve.

Bank of England downgrades UK growth forecast
Chris Giles – Financial Times
The Bank of England has sounded a more cautious note on Britain’s economy, replacing extremely optimistic growth forecasts from February with steady expansion and stable inflation.

Bank of England forex inquiry comes under DoJ pressure
Caroline Binham and Lindsay Fortado in London; Gina Chon in Washington – Financial Times
The integrity of a Bank of England inquiry is in question as prosecutors in the US probe what the central bank knew about traders’ behaviour in the foreign-exchange market.

Ghana’s central bank hikes interest rates to 22%
Financial Times
The Bank of Ghana has unexpectedly hiked its main interest rate by one percentage point to 22 per cent as the central bank tries to steady the volatile West African economy.


Currency Manipulation Has Emerged as the Big Sticking Point on Trade
William Mauldin – Wall Street Journal
The deepest and most difficult divide in the congressional trade fight has little to do with tariffs, workers or U.S. policy. Instead, it’s all about exchange rates. Key lawmakers from both parties are insisting on finding a way to punish other countries—or firms based in those countries—for alleged currency manipulation carried out in foreign capitals.

China won’t join global currency war: Pimco
Fion Li – Financial Review
China is unlikely to engineer a competitive devaluation of the yuan as it seeks reserve currency status, according to Pacific Investment Management Co.

Euro Banking Association Publishes Report on Cryptocurrencies
Alexander Cordova – CoinBuzz
Yesterday the Euro Banking Association (EBA), a conglomerate of over 200 banks and financial organizations from within the European Union, published a paper titled “Cryptotechnologies, a major IT innovation and catalyst for change”. Below are the highlights of the 25 page paper, which focuses on the practical applications of cryptotechnology in the short to medium term with an emphasis on banking and payments processing.

Indexes & Index Products

China Convinces Mobius It’s Ready for MSCI
Cindy Wang, Lisa Pham and Maria Levitov – Bloomberg
China is starting to convince international money managers that its $7.8 trillion stock market is ready for MSCI Inc.’s global indexes.


How should space mining be regulated?
Tibi Puiu – ZME Science
At the Canadian Institute of Mining’s annual convention, NASA scientists said exploration and prospecting of celestial bodies like the moon or asteroids is decades away, but even so this shouldn’t stop regulations from being well established in advance. At the event, concerns were raised that ownership and management of resources in outer space are still far from being resolved.

Gold Treasures Discovered in Ming Dynasty Tomb
Owen Jarus – Live Science
Archaeologists have discovered a Ming Dynasty tomb at a construction site in Nanjing, in China, revealing the skeleton of a woman named Lady Mei, along with brilliant gold treasures.

Glencore, Barrick Gold Looking to Sell Tanzania Nickel Project
Alistair MacDonald and Scott Patterson – Wall Street Journal
Mining giants Glencore PLC and Barrick Gold Corp. are looking to sell a joint nickel development project in Tanzania, according to people familiar with the matter, in a sales process that may struggle amid volatility in the pricing of this metal.

South African Union Wants to Double Basic Pay at Gold Mines
Paul Burkhardt – Bloomberg
South Africa’s second-biggest gold-mining union demanded more than double the basic wages for entry-level workers.


Bill Gross’s ‘Staggering’ Gift Puts Him Just Shy of the World’s Most Generous Billionaires
Brendan Coffey and Jack Witzig – Bloomberg
Giving away $700 million of his fortune has put billionaire bond investor Bill Gross among the world’s top donors but still leaves him just shy of the most charitable billionaires on earth.

Marc Faber Macro Views and Investments. US Bonds, Currencies and Gold Miners
Special thanks to Dr. Marc Faber for giving us permission to publish excerpts from his May Gloom Boom & Doom Report.

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