First Impressions

Take One: Data and Fintech Rocking The Free World
By Jim Kharouf, John Lothian News

Over the past two years, market participants have bemoaned the monetization of data by the largest exchanges.

CME raised the ire of the trading community last year with the increased data fees, especially at a time when many in the trading community were hurting from new regulation requirements, more technology investments to meet those demands, and a generally lousy trading environment with not a lot of movement in key markets. And there is the ongoing grumbling of traders that it is they who create the prices, not the exchange, and without them, there wouldn’t be any data to sell at all.

But an interesting thing is now happening in the data world. It is being given away for free in various new and interesting ways. True, this end-of-day data, along with various other types of data that is packaged, is not realtime. But that too may be of less importance to a growing number of traders who have discovered that the pure speed game is more or less over and the revived game of trading strategy has reemerged with the rise of more flexible and accessible trading technology.

What is emerging are platforms such as Barchart Direct, which puts all its historical market data on the cloud; Quandl, a free storehouse of all types of financial data; and Estimize, a free site for earnings and economic estimates – all of which are challenging the status quo of Thomson Reuters, Bloomberg and others. Meanwhile, even Trading Technologies is getting into the act, offering its customers free access to Fundamental Analytics.

Read the rest of this report here

Quote of the Day

“… [B]anks have shifted nearly a third of their MBS into HTM accounts, thanks to concern about capital volatility driven by recent regulatory changes. This means that banks should ultimately be less sensitive to rate moves, since fewer securities are being marked to market.”

JP Morgan analyst in the story, ” How Banks Are Using Accounting Shifts to Prepare for an Interest Rate Rise”.

Lead Stories

The $6.5 Trillion China Rally That’s Making Stock-Market History
by Kyoungwha Kim, Bloomberg
It’s enough money to buy Apple Inc. eight times over, or circle the Earth 250 times with $100 bills. The figure, $6.5 trillion, sums up the value created in just 12 months of trading on Chinese stock exchanges — and why some see a rally that’s gone too far.

HSBC to Shed 50,000 Jobs in Overhaul of Global Business
Dealbook – NY Times
Like other global institutions, HSBC, Europe’s largest bank, has been under severe pressure since the 2008 financial crisis to cut costs, meet stringent new regulatory demands and satisfy restless shareholders.
To that end, the bank said on Tuesday that would shed as many as 50,000 of its approximately 250,000 jobs as it sells several underperforming businesses, reduces the size of its global investment banking business and tries to cut billions of dollars in costs.

In Risky Bet, Wilbur Ross Roots for Debt Deal in Greece
Dealbook – NY Times
The contrarian American billionaire Wilbur L. Ross Jr. made a bundle betting on the Irish banking system when it was down and out, and a similar wager on Cyprus now looks promising. But Greece may prove to be the toughest test yet of his knack for cashing in on eurozone crisis spots.
Mr. Ross, who built his career investing in distressed assets, is the ringleader of a group of investors who last year pumped 1.3 billion euros, or about $1.47 billion, into Eurobank Ergasias, the third-largest bank in Greece.

How Banks Are Using Accounting Shifts to Prepare for an Interest Rate Rise
You are a large bank with a multibillion dollar portfolio of securities, ranging from municipal bonds to U.S. Treasuries and mortgage debt backed by the government.
For years, you were able to classify those securities as either available-for-sale (AFS) or held-to-maturity (HTM). If the market value of the securities moved, you didn’t have to worry too much unless you crystallized your paper gains or losses by actually selling the securities. So-called unrealized gains and losses on AFS holdings were excluded from net income and counted only toward shareholder equity under generally accepted accounting principles.

Bond Market’s Storm Finally Hits Junk Debt as Buyers Flee ETFs
Suddenly, junk bonds have lost their luster.
After providing a haven from the global bond-market selloff, speculative-grade securities have now joined the rout, tumbling almost 1 percent since the end of May. Investors are starting to flee, yanking $1.5 billion from the two biggest high-yield bond exchange-traded funds over the past week, according to data compiled by Bloomberg.

S&P Cuts German, Austrian Banks on Mandatory Bond Losses
Deutsche Bank AG, Commerzbank AG, Erste Group Bank AG and other German and Austrian banks had their ratings cut by Standard & Poor’s on the prospect that governments are less likely to provide aid in a crisis.
Deutsche Bank’s long-term rating was reduced by two levels to BBB+ from A, with a stable outlook, as S&P considers government support to be uncertain under new German bank resolution legislation, the ratings company said in a statement on Tuesday. Commerzbank was cut by one level to BBB+ from A-.

ICE chief hits out at exchanges, banks and brokers
The Trade News
Intercontinental Exchange chief executive Jeffrey Sprecher has called out exchanges, brokers and banks for fragmenting liquidity which has ultimately hit institutional investors.

British bank body was warned of distorted Libor as early as 2005, court told
The British trade organisation in charge of benchmark interest rates was warned as far back as 2005 that some banks were deliberately distorting their Libor rates for profit, according to evidence given on Monday at the trial of a former trader accused of rate rigging.

G.E. to Sell Buyout Financing Business for $12 Billion
Dealbook – NY Times
General Electric said on Tuesday that it had agreed to sell the bulk of a division that finances leveraged buyouts to the Canada Pension Plan Investment Board in a $12 billion deal.
The Canadian pension fund would acquire G.E.’s private equity lending unit in the United States, which is primarily made up of Antares Capital, as well as a $3 billion bank loan portfolio. News of the potential sale emerged this week.

Review to seek new laws banning manipulation of markets
Patrick Jenkins, Financial Editor, FT
New laws banning manipulation of markets such as foreign exchange and the creation of a market standards body to oversee conduct are expected to figure in a big review of UK financial regulation to be published on Wednesday.

Regulator Said to Have Pressed for Exit of Deutsche Chiefs
When the two executives who lead Deutsche Bank, Germany’s largest bank, unexpectedly announced their resignations on Sunday, pressure from angry shareholders was widely seen as the chief factor. But German regulators also played a role in the departures at the bank, according to two people briefed on the events that contributed to the leadership upheaval.

BlackRock Hires Columbia Finance Professor to Guide New Investment Strategy
Dealbook – NY Times
For the last four years, the asset-management giant BlackRock has dominated exchange-traded funds, the fastest-growing segment of the mutual fund industry.
But while BlackRock, the world’s largest fund company, remains the undisputed market leader for mainstream E.T.F.s, smaller, nimbler firms are challenging it when it comes to introducing a new generation of E.T.F.s that track specific market segments.

Central Banks

This Is the First Fed Number Traders Will Look for Next Week
When the Federal Reserve announces the outcome of its next meeting on June 17, there’s one number traders will be looking for first: where officials expect the benchmark federal funds rate to be at the end of the year.
In March, the median estimate of the 17 officials who sit on the U.S. central bank’s policy-setting Federal Open Market Committee was 0.625 percent — implying two interest-rate increases this year. As of today, market participants are convinced the Fed will do one in September, but aren’t so sure the central bank will follow through with the second one.

Central Bank Policies Help The Bubble By Holding Back The Economy
Our readers who hate central banks may like this macro view more than the prior, in which we reflected on bigger picture drivers (i.e. bigger than central bankers) behind the general ugly state of things.
To recognize there are deeper tides than monetary policy is not to deny the bad or dumb stuff that central bankers are doing. It of course further remains true that, if central bankers are firemen who provide emergency liquidity, Wall Street banks – who enjoy the protection and cover of central banks by grand design – are the greedy jerk pyromaniacs who typically start fires in the first place.

Grand Central: Memories of 2013 ‘Taper Tantrum’ Return – Real Time Economics
Yields on 10-year U.S. Treasury notes have risen from below 2% in April to 2.37% of late, a movement that is sparking talk in investment circles of a repeat of the “taper tantrum” of 2013.
Back then, yields shot up, stock prices tumbled and emerging markets convulsed when Federal Reserve officials broached publicly the idea of ending the bond buying program known as quantitative easing. The market volatility had real economic consequences – slowing a fragile U.S. housing recovery. But this doesn’t quite feel like a repeat of that episode just yet.

QE ‘sucking out’ liquidity in markets: Strategist
The aim of quantitative easing (QE) might be to increase liquidity in global markets, but it’s actually having the opposite effect, according to one analyst, who echoed comments from several financial institutions.
Antonin Jullier, global head of equity trading strategy at Citi, told CNBC Tuesday that the bond-buying policies implemented by central banks including the Federal Reserve and European Central Bank had had a detrimental effect.


Belgium Commemorates Waterloo With Euro, and France Is Not Pleased
NY Times
After it objected to a decision in March by Belgium to introduce a new 2-euro coin to commemorate the 200th anniversary of Napoleon’s ignominious defeat at Waterloo, the Belgians retreated, scrapping 180,000 coins they had already minted.
But in a style perhaps befitting a battle that ended French hegemony in Europe, victory is proving elusive.

Thomson Reuters outlines FX Platform upgrades
The Trade
Thomson Reuters has upgraded its Electronic Trading platform by integrating liquidity from its multi-bank platform FXall into the ET platform for the first time.

Crypto currencies: Bitcoin options come a step closer
by Helen Avery, Euromoney
Opportunity for banks same as in FX; Goldman investment ‘a positive signal’
An options market for crypto currencies is emerging that could escalate the growth of Bitcoin and Ripple. LedgerX an institutional trading and clearing platform is waiting for Commodity Futures Trading Commission approval to trade and clear options on Bitcoin for the institutional market.

Indexes & Index Products

James Brown on MSCI derivatives: “Seeing the Wood for the Trees”
In his personal blog, James Brown talks about why Eurex Exchange can offer the most compelling MSCI product suite to the end investor.

2 New ETFs to be Listed on July 15, 2015(Wed.) -Rakuten Investment Management- “Rakuten ETF-Nikkei 225 Leveraged Index” “Rakuten ETF-Nikkei 225 Double Inverse Index”
Japan Exchange Group


Newmont Mining Corp. to buy Cripple Creek & Victor gold mine
Greenwood Village-based Newmont Mining Corp. has agreed to buy Colorado’s largest gold mine from AngloGold Ashanti Ltd. for $820 million in cash.
The Cripple Creek & Victor gold mine, located near Victor in Teller County, would become Newmont’s first active operation in Colorado since the Idarado mine near Telluride closed in the late 1970s, company spokesman Omar Jabara said. The company, one of the world’s largest gold producers, also operates in Nevada, Australia, New Zealand, Ghana, Peru, Suriname and Indonesia.

Central Banks and Gold
Back when I worked at Merrill Lynch in the 1970s, I studied a number of data series useful for technical analysis. Bob Farrell had odd-lot buying and selling data going back decades, a rare treasure. Hardly anyone was buying and selling in odd lots anymore, but I wanted to see if any useful pattern emerged.


Guess How Many Nations In The World Do Not Have A Central Bank?
Central banking has truly taken over the entire planet. At this point, the only major nation on the globe that does not have a central bank is North Korea. Yes, there are some small island countries such as the Federated States of Micronesia that do not have a central bank, but even if you count them, more than 99.9% of the population of the world still lives in a country that has a central bank. So how has this happened?

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