First Impressions

Vision Statement: Fidessa Looking At Realtime and Predictive Analytics and Cybersecurity
JohnLothianNews.com

The financial technology space is always moving and aiming at moving targets. Justin Llewellyn-Jones COO and global head of derivatives for Fidessa, said firms now are facing broader and deeper technology challenges than ever, from real time order analytics to new cyber security needs.

Speaking with John Lothian News at the FIA IDX conference in London, Llewellyn-Jones said Fidessa has been focused on expanding its execution algorithms, an initiative that was moving forward over a year ago.

“We’ve been extending that set of algorithms in terms of the synthetic order types, the execution types we cover, the benchmark algorithms.”
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Quote of the Day

“No matter whom you talk to, there are I’d say questions about the implementation will and capacity. It will be really in the Greek government’s capacity to respond with policy decisions, with actions, that will dispel these doubts.”

European Central Bank President Mario Draghi in the story, “Draghi Tries to Call Time on Greek Crisis”

Lead Stories

The Disastrous Loan Deal That Shows Wall Street Still Has a Wild West
Laura J Keller – Bloomberg
JPMorgan Chase & Co. knew federal authorities were investigating the largest drug-testing lab in the U.S.
But the New York-based bank didn’t share that information about Millennium Health LLC with the people who were about to lend the company $1.8 billion in April 2014 because Millennium said it wasn’t material, according to a person with direct knowledge of the matter.
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U.S. Jobless Claims Fall to 281,000
David Harrison – WSJ
The number of Americans claiming first-time unemployment benefits fell for the first time in three weeks, a sign of a healthy labor market.
Initial jobless claims, a proxy for layoffs, fell 15,000 to a seasonally-adjusted 281,000 in the week ended July 11, the Labor Department said Thursday.
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Draghi Tries to Call Time on Greek Crisis
Jeff Black and Jill Ward – Bloomberg
Mario Draghi attempted to draw a line under Greece’s debt crisis, pledging further bank funding and confirming the nation’s place in the euro.
“We always acted on the assumption that Greece will remain a member of the euro area,” the European Central Bank president said at a press conference in Frankfurt on Thursday, after policy makers granted Greek lenders more emergency liquidity. “There was never a question.”
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Early read of banks’ living wills shows progress: Fed’s Yellen
Michael Flaherty and Megan cassella – Reuters
Federal Reserve Chair Janet Yellen said on Thursday that a preliminary read of the living wills that large U.S. banks submitted this month showed progress.
In response to a question about reducing the amount of systemically risky banks, Yellen told the Senate Banking Committee that the U.S. central bank is trying to put in place a set of incentives that will “reduce the systemic footprint and risk of (financial) firms.”
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It’s a Troubled World When Oil Is a Refuge for Equity Investors
Rakteem Katakey and Javier Blas – Bloomberg
You know the world is in trouble when investors look to the oil industry for safety.
Oil stocks, the worst performing shares in the world, are starting to lure investors, with dividend yields the highest since the financial crisis that began in 2008.
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S&P glum on risks in China debt markets, but Moody’s and Fitch more optimistic
Enoch Yiu – South China Morning Post
Global rating agencies yesterday blasted Beijing’s response to the recent stock market rout, saying the unprecedented intervention could hurt financial firms.
Moody’s Investors Service pinpointed securities firms, insurance companies and banks as sectors likely to be hurt by the battery of measures to shore up the stock market when it went into a free fall recently.
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$40 Billion Worth of AAA Student Loans Are at Risk of Becoming Junk
Jody Shenn and Matt Scully – Bloomberg
It’s no secret Americans are having trouble paying off their record $1.2 trillion in student loans. What’s less known is that the trend is turning a typically sleepy corner of the bond market into a potential hazard zone.
People who borrowed money for education before the financial crisis are taking longer than forecast to repay their debt, thanks in part to relief programs. That’s creating a risk for holders of securities created by bundling the loans — which are government guaranteed — because the bonds may not be retired by maturity.
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A chance of showers — Financiers in London are always predicting their industry’s demise. This time, they may be on to something
The Economist
Upon joining a panel mulling new regulations for London’s financial industry in 2010, Martin Taylor was confronted with “an operatic chorus” of bankers threatening to move elsewhere if oversight became too strict. Moneymen from all sorts of firms told the former boss of Barclays, a big British bank, that they were on the verge of decamping to Switzerland, apparently a paradise of low taxes and sympathetic regulators, safely beyond the reach of the European Union’s banker-bashing. “The City”, for centuries a mainstay of the British economy, risked losing its status as the centre of global finance, and with it hundreds of thousands of jobs. It wasn’t until Mr Taylor learned that the financiers of Zurich and Geneva were simultaneously threatening to relocate to London that his concerns eased somewhat.
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Big Banks Keep Scaling Back Bad-Loan Reserves
Michael Rapoport – WSJ
After 5-and-a-half years, big banks are still releasing chunks of their bad-loan reserves – and thus boosting their earnings, at least a little.
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US Justice Department Announces Three Banks Reach Resolutions Under Swiss Bank Program
Press Release – Mondovisione
The Department of Justice announced today that Mercantil Bank (Schweiz) AG, Banque Cantonale Neuchâteloise and Nidwaldner Kantonalbank have reached resolutions under the department’s Swiss Bank Program.
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Bankers hope better tone will entice LatAm issuers
Paul Kilby – Reuters
An improved backdrop for global markets on Thursday has bankers hoping more LatAm borrowers will leap through what is an approximately two-week window before the August doldrums set in.
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Central Banks

Yellen Favors Tightening in a ‘Prudent and Gradual’ Manner
Matthew Boesler and Christopher Condon – Bloomberg
Federal Reserve Chair Janet Yellen told lawmakers that waiting too long to raise interest rates holds risks for the U.S. economy, along with tightening too quickly.
“There are risks on both sides,” she told the Senate Banking Committee on Thursday in her second day of congressional testimony. “My own preference would be to proceed in a prudent and gradual manner.”
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Greece debt crisis: ECB raises funding for Greek banks
BBC
The European Central Bank says it has increased emergency funding to Greek banks by 900m EUR for one week.
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Central Banks Likely to Jump Into China Bond Market
Fiona Law – WSJ
China’s lifting of restrictions on bond purchases by foreign central banks is likely to spur buying, given the banks’ keen interest in yuan assets.
Right after the Chinese central bank announced the change Tuesday, Jukka Pihlman, head of central banks and sovereign-wealth funds at Standard Chartered Bank, was caught by calls from clients and had to cancel his planned day off.
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‘Audit’ the Fed and you blunt our best economic tool
Glenn Hutchins – Financial Times
The Federal Reserve has done as much as any official body to spare America a repetition of the grim depression of the 1930s, but that is not always enough to make it popular. Suspicions have resurfaced that powerful financial interests are in league with the Fed to gain advantage for themselves, prompting calls from the left and right to “audit the Fed”.
Janet Yellen, the Fed chair, was this week moved to warn against measures that might subject policymakers to “short-term political pressure, in the name of transparency”. She is right. In the past six years, monetary policy has been the only consistently functional economic policy tool.
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A Short History of The ECB’s Complicated Relationship With Greece
Todd Buell – WSJ
As the ECB prepares for another press conference that’s very likely to be all about Greece, here’s a quick look back at memorable moments and quotes involving the complicated relationship between the central bank and Greece over the last five-plus years of Greek crisis. Here’s a walk down memory lane.
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Carney indicates interest rates may rise at ‘turn of year’
BBC
Bank of England governor Mark Carney has indicated that UK interest rates could rise “at the turn of this year”.
In a speech he said that he expected rates to rise over the next three years, reaching “about half as high as historical averages”, or about 2%.
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Currencies

There’ve Been Some Big Moves in Currencies This Week
Rachel Evans and Julie Verhage – Bloomberg
Traders in the $5.3 trillion-a-day foreign exchange market are having a busy week as central-bank decisions and falling commodity prices drag currencies to multiyear lows.
Here’s a roundup of the latest moves.
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Resurgent Dollar Shakes Off Slump
Ira Iosebashvili and James Ramage – WSJ
Four months ago, a roaring rally in the dollar sputtered out. Now it is revving back up.
The greenback is close to regaining all the ground it has lost since March, when it hit a 12-year high. Driving the broad gains against other currencies is growing confidence that the U.S. economy has picked up enough speed following a first-quarter slump to warrant the first interest-rate increase in nearly a decade. Higher rates tend to make a currency more attractive to investors.
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No End Seen to Franc Strength Six Months After Swiss Scrap Cap
Lukanyo Mnyanda – Bloomberg
Thomas Jordan’s wait for a weaker franc looks to be a long one.
Six months since the Swiss National Bank president gave up capping the currency at 1.20 per euro, it’s still stronger than that level. And even 4 1/2 years from now the franc won’t have fully recovered from the surge the SNB’s move allowed, analyst estimates show.
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The Big Mac Index – A few dollars less
The Economist
In November the McDonald’s restaurant in Pushkin Square in Moscow reopened following a three-month closure ordered by local health inspectors. The penalty was widely seen as retaliation for Western sanctions against Russia. The restaurant was a predictable target. When it first opened in 1990, it symbolised the triumph of American capitalism over a crumbling Soviet Union. Now it holds up a mirror to another American economic victory: the resurgence of the dollar. All but four currencies in our Big Mac index look cheap compared to the greenback. The rouble is the cheapest of all.
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Indexes & Index Products

ISE ETF Ventures Launches Two New Indexes
Press Release – International Securities Exchange, LLC
ISE ETF Ventures today announced the launch of the ISE Mobile Payments Index (index ticker: IPY) and the ISE Big Data Index (index ticker: BGD). These indexes are licensed to PureFunds for the creation of two exchange-traded funds (ETFs), which begin trading today on NYSE Arca.
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April Peaks and Troughs in the S&P/Case-Shiller U.S. National Home Price Index
Marya Alsati-Morad – Indexology: S&P Dow Jones Indices
In this post, we are going to look at how April 2015 has fared compared with historical April months for the S&P/Case-Shiller U.S. National Home Price Index. Exhibit 1 depicts the historical monthly returns (April over March) of the S&P/Case-Shiller U.S. National Home Price Index, since 1987. All returns refer to April over March returns unless otherwise specified.
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Gold

Gold is on the cusp of a ‘major breakdown’: Technician
Amanda Diaz – CNBC
Gold bugs simply can’t catch a break.
After starting 2015 with a bang, bullion made a new year-to-date low this week as Fed Chair Janet Yellen reiterated plans to raise interest rates later this year. The precious metal is now more than 12 percent from its January high, and according to one technical analyst, it could be on the “cusp of a major breakdown.”
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Credit Deflation and Gold
Alasdair Macleod – GoldSeek
There is a common view in financial markets that credit deflation is bad for gold prices, because gold nowadays is regarded as an asset to be sold in the scramble for cash when people are forced to pay down their debts. When asked by Congressman Ron Paul his opinion on gold four years ago, Ben Bernanke replied it was not money, just another asset, appearing to confirm this view.
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Are Shares of Gold Miners a ‘Buy’?
Barry Ritholtz – Bloomberg
“A gold mine is a hole in the ground with a liar standing on top of it.”
— unverified quote attributed to Mark Twain
A few weeks ago, we discussed how gold can’t seem to catch a break. Despite a parade of potential market-roiling news, the reaction of the shiny yellow metal has been one of benign indifference.
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The world’s highest grade gold mines
Vladimir Basov – MINING.com
The grade or concentration of a mineral or metal in ore directly affects costs associated with mining as well as its subsequent beneficiation and extraction of precious components.
Under otherwise equal conditions, a lower grade means a higher cost per unit weight of extracted metal making high-grade ore deposits a crucial consideration for all types of investors in mining.
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Miscellaneous

Fanya Metals Exchange may have bamboozled Chinese retail investors out of billions
Gwynn Guilford and Heather Timmon – Quartz
China’s volatile stock markets aren’t the only places where retail investors are losing huge amounts of money these days. Thousands of investors may be out billions of dollars after investing in a Chinese company that grew to become the world’s largest rare metals trading exchange in just four years.
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