First Impressions

Five Minutes with Mark Omens on CME’s New Futures Institute
Sarah Rudolph – John Lothian News

On Wednesday, the CME Group announced the launch of a new education initiative, the Futures Institute, an online platform for education on futures and options on futures. It offers live instruction, trading simulation, interactive training modules, and market research. JLN spoke with Mark Omens, senior director and head of retail sales for CME Group, to find out what stands out about the new program and who can benefit.

You can read the press release HERE

The web site can be found myfuturesinstitute.com

Q: There are other educational web sites out there for the futures industry. What is innovative and unique about this one?

A: What makes this web site different is that we’re trying to integrate learning about the product by actually applying this information to trading in a simulated environment. We take subject matter that may be confusing for someone who is new to the futures world, and break it up into bite size moments so the individual can integrate them into the marketplace while practicing trading those markets.

Read the rest of the article on JohnLothianNews.com

Quote of the Day

“Volatile volatility, these extreme moves, tend to drive people to the sidelines because nobody is able to take a view as to how they should be protecting their business. When you get these sudden swings, people don’t know what to do, activity just stops.”

John Gerspach, Citigroup Chief Financial Officer in the story, ” Banks Stung by ‘Volatile Volatility’ as Fixed-Income Drops”.

Lead Stories

Swiss franc rockets as currency ceiling scrapped
Michael Hunter and James Shotter, FT
The Swiss franc has soared against the euro after the nation’s central bank shocked markets by abandoning a long-held ceiling it put in place more than three years ago to stem inflows of hot money from overseas.
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Lone Forecaster in Texas Predicted the Swiss Currency Cap Would Fail
Lucy Meakin – Bloomberg
After Switzerland’s central bank pledged the “utmost determination” to defend its currency ceiling last month, only one currency forecaster began this year predicting the cap’s demise.
When the Swiss National Bank removed its limit on the exchange rate today, Jason Schenker, president of Austin, Texas-based Prestige Economics LLC, was proved right.
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Banks Stung by ‘Volatile Volatility’ as Fixed-Income Drops
Michael J. Moore, Hugh Son and Dakin Campbell – Bloomberg
Big banks have been begging for volatility. Just not the kind they got last quarter.
JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Citigroup Inc. (C) posted their worst combined quarterly trading revenue since 2011, led by a 23 percent drop in fixed-income, currencies and commodities, or FICC. That contributed to the first annual decline in aggregate net income for the three biggest U.S. banks since the financial crisis. Their stocks fell.
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Knowledge needed to prevent Lehman repeat
Andrew Haldane, Aurel Schubert and Richard Berner, FT
When Lehman Brothers failed in 2008, it exposed fault lines in the global financial architecture. Many of those have since been recognised and progress made towards closing them, led by the Financial Stability Board under the auspices of the G20 heads of state.
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Flexible Bond Funds Flop as Rate Drop Stings Top Sellers
By Charles Stein, Bloomberg
The new generation of bond funds just can’t keep up with your parents’ investments.
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CME Group and GFI Group Announce Revised Offer for GFI Group Stockholders to Receive $5.60 per GFI Group Share
CME Group
Private Consortium of GFI Group Management to Increase Cash Payment for GFI’s IDB Business to $282M from $254M Plus the Assumption at Closing of Approximately $77M in Unvested Deferred Compensation Liability to Employees
Increased Consideration Passed Entirely to Holders of GFI Stock Excluding GFI Group Management Consortium Who Will Receive Only $5.25 per Share
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Dimon warns breaking up JPMorgan would hurt US financial power
Tom Braithwaite in New York, FT
US financial power would be diminished if it were left to Baby JPMorgans to compete with emerging Chinese megabanks, Jamie Dimon, JPMorgan Chase’s chief executive, said on Wednesday as he was forced to make the case for his bank staying intact.
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World Bank Sells Record Green Bond Tied to ‘Ethical’ Companies
Yakob Peterseil – Bloomberg
The World Bank sold $91 million of green bonds tied to an index of “ethical” companies, its largest offering of green bonds linked to an equity index and the first to be offered to individual investors.
The securities, which don’t pay a coupon, are linked to the performance of the Ethical Europe Equity Index, a group of European companies that have no involvement in weapons, gambling, tobacco or nuclear energy. The seven-year notes were sold in $100 denominations to individuals in Belgium and Luxembourg, according to a World Bank statement.
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U.S. SEC adopts rules establishing regime for swap data warehouses
By Sarah N. Lynch, Reuters
U.S. securities regulators took another step toward shedding more light on the over-the-counter derivatives market Wednesday, adopting a raft of measures to give them a direct window into the opaque market.
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CBOE considers posting employees abroad
By Lynne Marek, Crain’s Chicago Business
CBOE Holdings has been spooling up sales abroad without actually placing employees anywhere outside the U.S., but its Chicago-centric approach could change sometime soon. of its employees outside the U.
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Golden parachutes are lead balloon for investors
Chris Bryant and Arash Massoudi, FT
He may lose his job as TRW Automotive chief executive, but John Plant will still have reason to cheer if Germany’s ZF Friedrichshafen completes a $12.4bn takeover of the US automotive supplier later this year.
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Ex-SAC’s Kumin Said to Gather $1 Billion for Hedge Fund Startup
By Saijel Kishan, FT
Solomon Kumin, who was chief operating officer of billionaire Steven A. Cohen’s SAC Capital Advisors, is on track to gather $1 billion for his hedge fund firm when it starts trading in March, according to a person familiar with the matter.
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Bill Ackman distances Pershing Square hedge fund from rivals
Miles Johnson, Hedge Fund Correspondentm, FT
Bill Ackman, one of the world’s highest profile hedge fund managers, has said he would prefer to be called “something else” ? and defended his record at a time when the industry has been come under fire from some of its largest investors.
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Central Banks

Surprise Move by Swiss Central Bank Underscores Global Uncertainty
David Jolly and Neil Irwin – NY Times
The Swiss central bank stunned global markets on Thursday by abandoning a crucial part of its three-year effort to hold down the value of its national currency against the ever-weakening euro.
The country had been trying to cap the value of its currency, the franc, as nervous investors fled the market tumult and sought the relative safety of Switzerland. But in the face of a steep decline in the euro, the plan proved too risky and too costly to continue.
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Swiss Shock Tarnishes Central Banks
Richard Barley – WSJ
RIP the Swiss National Bank’s exchange-rate policy, 2011-2015—and, potentially, the central bank’s credibility.
The SNB’s decision Thursday to scrap its policy of preventing the Swiss franc from strengthening beyond 1.20 to the euro came as a massive shock to markets. The news that the SNB was also cutting interest rates further into negative territory counted for little: The franc rocketed, reaching 0.85 to the euro before rebounding to 1.05; Swiss equities fell 9% and the Swiss 10-year yield fell to 0.04%.
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Europe’s Smaller Central Banks Likely to Cut Rates After Swiss Move
Charles Duxbury – WSJ
The Swiss National Bank ‘s dramatic moves Thursday look like a sign of things to come in other parts of Europe, as some smaller central banks brace themselves for the effects of a major shift in policy by the ECB later this month.
Without warning, the SNB abandoned the currency ceiling it had maintained since 2011, and cut interest rates. That decision came ahead of a Jan. 22 meeting of the European Central Bank’s governing council, at which it is expected to launch a large-scale program of government bond purchases.
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On Switzerland, the Floor and Losing Faith in Central Banks
Alen Mattich – WSJ
In the long-running fight between economic fundamentals and central banks, the latest round went to the fundamentals.
That’s a worry. Because a substantial part of central bankers power hinges on a perception of their invincibility.
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She’s No Greenspan: Yellen Signals She Won’t Babysit Markets in Turmoil
Craig Torres – BloombergBusinessweek
Janet Yellen is leaving the Greenspan “put” behind as she charts the first interest-rate increase since 2006 amid growing financial-market volatility.
The Federal Reserve chair has signaled she wants to place the economic outlook at the center of policy making, while looking past short-term market fluctuations. To succeed, she must wean investors from the notion, which gained currency under predecessor Alan Greenspan, that the Fed will bail them out if their bets go bad — just as a put option protects against a drop in stock prices.
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WSJ Survey: Economists Pare Back Fed Rate Rise Expectations – Real Time Economics
WSJ
Global market turmoil and weak overseas growth have prompted economists to trim their estimates of how much the Federal Reserve will raise interest rates in coming months, a new Wall Street Journal survey shows.
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Profits of the Fed
New York Sun
One of the biggest scandals in America right now is the profits of the Federal Reserve. Last year alone the central bank turned over to the United States Treasury nearly $100 billion in profits, or a fifth of the federal budget deficit. Since 2008, the profits the Fed has paid over to the Treasury have totaled nigh half a trillion dollars — $468.8 billion according to the Wall Street Journal. “The central bank has become a huge money-maker for the Treasury,” the newspaper said in an important editorial issued on Monday under the headline “The Fed Cash Machine.”
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Currencies

Swiss central bank shocks markets with currency ‘tsunami’
By Alice Baghdjian and Silke Koltrowitz, Reuters
The Swiss National Bank (SNB) shocked financial markets on Thursday by scrapping a three-year-old cap on the franc, sending the safe-haven currency soaring through the 1.20 per euro limit and stoking fears about the export-reliant Swiss economy.
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Forex Probe Finds New Signs of Potential Wrongdoing; J.P. Morgan and Citi Sack or Suspend Forex Staff Partly as a Result of U.S. Justice Department Probe
By Chiara Albanese, David Enrich and Katie Martin, WSJ
Banks and traders that figured the worst was over in the foreign-exchange scandal are facing an unpleasant surprise.
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Bitcoin’s Plunge Bites ‘Miners’; As Value Falls, Some Pull Plug on Computers Supporting System
By Michael J. Casey, WSJ
A rapid collapse in the value of bitcoin is squeezing some owners of the computers that support the digital currency and raising concerns about its viability.
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Indexes & Index Products

Legends Of Indexing: Kathleen Moriarty
ETF.com
Kathleen Moriarty, a partner at the law firm Katten Muchin Rosenman, worked with the late Nate Most on the development of the first ETF, the S&P Depositary Receipts, now known as the SPDR S&P 500 ETF (SPY/A-98). That earned her the nickname in the industry of “Spider Woman.” She’s since gone on to advise a wide range of ETF issuers?including iShares, Vanguard and State Street Global Advisors?as they have brought their products to market, and has worked on some of the best-known products such as the SPDR Gold Trust (GLD/A-100), the first ETF to actually provide investors with ownership in physical gold.
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iShares exec says it’s legit to worry about sheer number of ETFs
By Victor Reklaitis, MarketWatch
One challenge for investors using ETFs is the sheer number of these low-cost, index-tracking funds?nearly 1,700 in the U.S.
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Gold

Gold Spikes on Swiss Franc Stunner
Kristen Scholer – WSJ
It’s a golden day for precious metals.
Gold, silver, platinum and palladium are spiking after the Swiss National Bank surprisingly announced it’s scrapping its currency floor and lowering its already negative interest rate. The news hit the tape shortly before 4:40 a.m. New York time, sending gold up roughly $35 to $1261 a troy ounce.
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Swiss Central Bank Confirms ‘Currency Battle,’ Sets Up Bull Market for Gold
Chris Dieterich – Barron’s
An about-face by the Swiss National Bank catapulted gold prices to a four-and-1/2 month high as investors sought the safety of the yellow metal.
Gold futures rose $26, or 2.1%, to $1,260 an ounce in recent trading. The SPDR Gold Shares exchange-traded fund (GLD) rose 2.6% to $121. The move put GLD right at its so-called 200-day moving average, a medium-term technical pivot point. ETFs that own miner stocks got lift from gold’s rise. The Market Vectors Gold Miners ETF (GDX) rose 6.2% in recent trading.
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Gold Demand Seen Expanding 15% by HSBC on Asia-to-ETP Buying
By Glenys Sim, FT
Gold demand will rebound in 2015 as bullion consumption in Asia increases and investors return to exchange-traded products backed by the metal, according to HSBC Securities (USA) Inc.
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Why 2015 will be the year for gold: Top analyst
Amanda Diaz – CNBC
Suddenly, gold is getting its groove back.
After two straight years of losses, gold is off to its best start to year since 2008. And, according to one well known analyst, 2015 could have gold bugs smiling.
In an interview with CNBC.com’s Futures Now, Sterne Agee’s precious metals and mining analyst Michael Dudas said that gold should continue to benefit from central banks’ efforts to devalue their currencies. Gold prices rose more than 2 percent Thursday to a four-month high after the Swiss National Bank shocked the world and said it would abandon its euro currency peg. The precious metal is now up more than 6 percent year to date.
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This is Why Trees Come Down When the Gold Price Goes Up
Rishi Iyengar – TIME
The steep rise in the price of gold is a factor in the heightened rate of deforestation in South America, a new study has found.
The study, conducted by researchers from the University of Puerto Rico, says small-scale miners now find it profitable to try and extract the metal from low-grade seams underneath the region’s rain forests.
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