First Impressions

Most of the team is off today or on assignment; so on behalf of Jim, Doug and Jeff, I (Jon) now present to you the JLN Financials, Minimalist Edition…

Quote of the Day

“Banks do not look at allocating on a first-come, first-served basis, but on what would be in the best interests of the clients and the market.”

An unnamed banker, describing shocking – SHOCKING! – and previously unheard-of bond market behavior in, “Possible SEC inquiry raises age-old bonds question”

Lead Stories

Spanish, Italian Bonds Back on the Menu in Japan
MoneyBeat – WSJ
Money managers at large Japanese firms are snapping up government bonds in Spain and Italy after shunning them for years, as evidence grows that Europe’s debt-laden economy is recovering.

Possible SEC inquiry raises age-old bonds question
A possible SEC investigation into how new bond issues are allocated has re-opened one of the longest-running debates in the capital markets: are bonds allocated to investors fairly?

‘Dash for trash’ slows as returns on junk bonds diminish
Vivianne Rodrigues and Michael Mackenzie in New York –
When Michael Milken, the trader at Drexel Burnham Lambert, first started to pitch junk bonds for the masses in the early 1980s, his message was simple: the rewards of owning the bonds far outweighed the default probabilities of the debt-laden companies issuing them.

Morgan Stanley Invites You to Meet…M1KE
Katie Martin – MoneyBeat – WSJ
Proof, as if it were needed, that financial markets have an unhealthy obsession with acronyms: Morgan Stanley’s rates strategists have sent out a jaunty note asking “Have you met M1KE”?

Pimco raises $5.5bn to buy bank assets
Giles Turner – Financial News
Bond giant Pimco has raised $5.5 billion to buy bank assets in the US and Europe and has closed the fund to new investors, according to a person familiar with the fundraising.

The Growing Mess Which Will Be Left Behind By The Abenomics Experiment
A Fistful Of Euros
According to wikipedia, “overdetermination is a phenomenon whereby a single observed effect is determined by multiple causes at once, any one of which alone might be enough to account for (“determine”) the effect.That is, there are more causes present than are necessary to generate the effect”. In this strictly technical sense Japan’s deflation problem is overdetermined – there are multiple causes at work, any one of which could account for the observed phenomenon.

All China’s roads lead to a lower renminbi
Henny Sender –
One of the main topics on the sidelines of the G20 meetings in Sydney at the end of February was why the normally well-behaved renminbi suddenly turned lower in the midst of the proceedings.

Central Banks

SEC’s Gallagher accuses Fed of power grab over foreign brokers
The Federal Reserve’s tough new capital rules for foreign banks with U.S. operations constitute a power grab to oversee stock brokerages that could ultimately harm market liquidity, a top U.S. securities regulator said Monday.

Russian central bank confirms increased involvement on FX market
Russian central bank confirmed on Monday that is has increased its involvement in the foreign currency market after the rouble plummeted and said it will continue on its path to shift its main monetary policy focus to inflation targeting after situation on markets stabilises.

A Conversation With William Dudley
MoneyBeat – WSJ
The Federal Reserve confronts new puzzles as it undergoes a major leadership shift in Washington. The U.S. economy finished 2013 appearing to be on a faster growth track, but has started the new year off on a slow track. The unemployment rate has been falling, but millions of workers have left the labor force. Inflation is running low, but investors fret new financial bubbles could be emerging.


Forex trading speeds up moves to computer platform
Daniel Schäfer and Delphine Strauss –
Tired of headlines about alleged trader misbehaviour, investment banking executives are accelerating longstanding efforts to save costs and become technology leaders by replacing humans with computers.

China Central Bank’s Move on Yuan Leads to More Cash Flowing Into System
China’s sudden move to engineer a weaker yuan to curb heavy inflows from abroad has led to an unexpected and undesirable upshot: a sharp increase in cash flowing into its financial system.

Mt Gox collapse could ultimately help bitcoin cause: NY regulator
The collapse of the bitcoin exchange Mt. Gox is part of a struggle for survival that could ultimately strengthen the virtual currency industry, New York’s banking regulator said on Monday.

Bitcoin Loss Highlights Elusive Paths of Regulation
Can nearly $450 million go missing without a crime taking place? That is only one of the questions stemming from the collapse of the Bitcoin exchange Mt. Gox that present a host of challenges for governments worldwide that are struggling to regulate virtual currencies.

MahiFX Launches MFX Compass e-FX Suite for Banks
MahiFX Ltd, the foreign exchange technology provider, today announced the launch of ‘MFX Compass’, the most comprehensive and advanced electronic FX trading technology and support framework for banks and brokerages.

Indexes & Index Products

S&P DJI to review planned changes to Google weightings
Standard & Poor’s Dow Jones Indices on Monday said it will review whether its planned changes to Google Inc’s weightings in widely used market indexes could hurt investors, and took the unusual step of asking worried index fund managers to address the potential costs.

Short-Term VIX Soars on Ukraine Fears
Kaitlyn Kiernan – MoneyBeat – WSJ
Investors are preparing for a rocky week ahead, but the market’s so-called fear gauge shows they don’t see volatility sticking around long.


China Driving Gold Prices More Than West, HSBC Says
MoneyBeat – WSJ
China’s buying of gold jewelry, coins and bars is now the biggest driver of prices, not investment demand from the West, according to HSBCHSBA.LN +1.58% Global Research.

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