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.”
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Quote of the Day

“They made it pretty clear that they expect things will pick up, and that the labor market will tighten. If things turn out like we are expecting and like they are expecting, then I think September makes sense”.

Gus Faucher, senior economist at PNC Financial Services Group in the story, “Fed Still Open to Second-Half Rate Rise Despite Slowing Economy”.

Lead Stories

Treasury Moves Cause More Pain for Gross’s Volatility Play
Investors who thought Treasury trading was becoming a snooze — including Bill Gross — may be jarred into an unpleasant reality, if chart readers’ crystal balls are correct.
When the U.S. 10-year note yield pushed above 2.1 percent on Thursday, the highest level in seven weeks, it breached a couple of key technical levels that signal it may keep rising. That means prices would plummet.

The ‘Flash Crash’ Case Doesn’t Add Up
Few things are more satisfying than watching corporate criminals get what they deserve. The damage these people inflict on their victims always outweighs the impact of some schmuck who robs a liquor store. But all too often the silk-suited crowd gets off without even a hand slap, while the other crook gets dumped in prison for decades.

Warren Buffett losing some mojo on his economic ‘moats’
Warren Buffett has carved out a core stock-picking strategy of investing in companies with strong economic “moats,” businesses that have built, fortified and generated success from well-known brands that make it difficult for them to succumb to competitive forces.
But for a number of holdings in his stock portfolio, the moats may be drying up and the walls could be breached.

Bernanke’s Latest Blog Post Takes a Brutal Shot at the Wall Street Journal Editorial Page
Former Federal Reserve Chairman Ben Bernanke started a blog at the Brookings Institution late last month, and he has shown a penchant for calling out those with whom he disagrees.
The first prominent fight was with Larry Summers over secular stagnation, and today he took issue with a recent piece by the Wall Street Journal’s editorial page.

SEC Nods to Industry in Proposals on CEO Pay, Overseas Swaps
Bloomberg Business
The five-member SEC voted unanimously to propose a measure that would allow overseas banks to conduct some derivatives trades without having to comply with U.S. regulations. The SEC also proposed a requirement for companies to show annual comparisons of executive pay and the stock’s performance. The rule would allow companies to omit new stock and options, which can make up the biggest part of compensation.

SEC Lacks Accounting Controls It Regulates, GAO Says
The U.S. Securities and Exchange Commission, which polices public companies’ financial reports, lacks internal controls over its own accounting, a government watchdog said Thursday.
The SEC in fiscal 2014 didn’t have proper systems in place to account for money the regulator had seized from fraudsters or its inventory of property and equipment, James R. Dalkin, director of the GAO’s office of financial management and assurance, said in the letter to SEC Chair Mary Jo White discussing the findings of an audit.

China Rethinks Safety Net for Its Banking System
When the United States started insuring customer deposits, the government wanted to instill faith in the country’s financial system, which had been broken by a string of bank runs and failures during the Great Depression.

China Raises Investment Cap for Foreign Investors
China allows foreign investors to buy $10 billion more of stocks, bonds
China gave foreign investors, including Singapore’s sovereign-wealth fund and the Australian arm of Vanguard Group, access to buy a further $10 billion worth of the country’s stocks and bonds as Beijing accelerates the opening up of its markets.

Greece signals concessions in crunch talks with lenders
Greece’s government signaled the biggest concessions so far as talks with lenders on a cash-for-reforms package started in earnest on Thursday, but tried to assure leftist supporters it had not abandoned its anti-austerity principles.
Prime Minister Alexis Tsipras’s three-month-old government is under heavy pressure at home and abroad to reach an agreement with European and IMF lenders to avert a national bankruptcy. A new poll showed over three-quarters of Greeks feel Athens must strike a deal at any cost to stay in the euro.

Saudi Arabia Is Burning Through Its Foreign Reserves at a Record Pace
Saudi Arabia is burning through foreign reserves at a record pace as the largesse of the new king and regional turmoil ratchet up pressure on public finances already hurt by the oil price slump.
The kingdom spent $36 billion of the central bank’s net foreign assets — about 5 percent of the total — in February and March, the biggest two-month drop on record, data released this week show. The fall was in part due to King Salman’s order to give government employees and pensioners a two-month bonus after he ascended to the throne of the world’s biggest oil exporter in January.

BGC plans to sell Trayport unit after receiving approaches
Philip Stafford in London, FT
BGC Partners, the US interdealer broker, is looking to sell Trayport, one of its electronic trading venues, after being approached by several parties in recent months, its chief executive has said.

LSE to bring block trading to ETFs
The Trade
The London Stock Exchange (LSE) has revealed plans to launch a block trading facility for exchange-traded funds (ETFs) next month, saying it hopes to capture a significant portion of current OTC trades.

SEC Announces Insider Trading Charges Linked to China Tech DealSEC
SEC alleged two Beijing residents bought out-of-the-money call options before deal was announced. SEC alleged two Beijing residents bought out-of-the-money call options before deal was announced.
The U.S. Securities and Exchange Commission announced insider trading charges against two Beijing residents on Wednesday, alleging they purchased stock options ahead of Chinese e-commerce company’s purchase of a $1.6 billion minority stake in rival

R.B.S. Posts First-Quarter Loss on Restructuring and Litigation Costs
Dealbook – NY Times
The Royal Bank of Scotland said on Thursday that it fell to a loss in the first quarter as the British bank was again weighed down by restructuring and litigation costs.

BNP Paribas Profit Rose 18% in First Quarter
Dealbook – NY Times
BNP Paribas, France’s largest bank, said on Thursday that its first-quarter profit rose on the back of a strong performance at its corporate and investment banking business and a decline in the euro that increased its dollar-based returns.

Central Banks

Central Banks ‘Safe’ No Longer as Yellen & Co. Keep Options Open
The Federal Reserve is a “safe” bet no more and neither are many of its global counterparts.
After years of telegraphing their intentions, Chair Janet Yellen and colleagues on Wednesday put interest-rate increases “on the table and the focus will be squarely on the data,” said Roberto Perli, a partner at Cornerstone Macro LLC in Washington.
“This was technically the last ‘safe’ Federal Open Market Committee meeting,” Perli said.

Fed Still Open to Second-Half Rate Rise Despite Slowing Economy
Federal Reserve policy makers left open the possibility of raising interest rates in the second half of this year by playing down the significance of the economy’s slowdown to a near-standstill in the first quarter.
In a statement issued Wednesday after a two-day meeting, Chair Janet Yellen and her colleagues blamed the winter slump partly on “transitory factors” and reiterated their belief that growth will pick up to a “moderate pace.”

Is a Fed Hike a September Song? Or is it December?
After a weak first-quarter economic performance that was even worse than it appeared, the Federal Reserve is unlikely to raise interest rates until at least September and more likely December. And that’s caused a reversal of fortune in major asset classes.

Bank of Japan Moves Goalposts, Keeps Playbook — For Now
Faced with a sharp drop in the inflation outlook six months ago, Bank of Japan Gov. Haruhiko Kuroda stunned global financial markets — and officials inside the central bank — by expanding his already-massive stimulus program.
As the BOJ unveiled Thursday its new semi-annual forecast, policymakers were once again forced to mark down their official inflation projection, and to push back further the date when they hope to hit their 2% target. But this time, officials passed up a chance to pump still more money into the Japanese economy, adding a new humility to their once-cocky campaign to end deflation.

Text of the Federal Reserve’s statement Wednesday
The State
Below is the statement the Fed released Wednesday after its policy meeting ended:


This is the currency battleground you’ll want to watch
Dollar bulls are not ready to throw in the towel and are still betting diverging central bank policy sends the euro to parity with the U.S. currency later this year.
Weak technicals for the greenback are making some investors squirm, as the euro charges ahead and looks set to score more gains. That is the battleground for the dollar, which was higher against the pound, the yen and emerging market currencies Thursday.

Bank of America to Pay $180 Million to Settle Investors’ Forex Lawsuit
Bank of America Corp. has agreed to pay $180 million to settle a lawsuit by private investors who accused the bank and others of manipulating foreign-exchange rates.

Goldman and IDG Put $50 Million to Work in a Bitcoin Company
Dealbook – NY Times
Goldman Sachs is becoming the first major bank to make a significant investment in a Bitcoin-focused company, giving a vote of confidence to the embattled virtual currency.
The Wall Street bank announced late Wednesday that it had struck a partnership with a major Chinese investment firm, IDG Capital Partners, to lead a $50 million investment into Circle Internet Financial, a start-up that aims to use the technology underlying Bitcoin to improve consumer payments.

Meet the company that wants to put a bitcoin miner in your toaster
Financial Times
The Manhattan Project-type secrecy surrounding a company called 21 Inc — hitherto known as 21e6 — has been stupendous, even by Silicon Valley standards.
Not that this has stopped cryptocurrency friendly journalists like Michael J. Casey at the WSJ (co-author of the Age of Cryptocurrency) and Coindesk’s Pete Rizzo from propagating 21 Inc’s claims about bitcoin being bigger than Google.

U.S. Treasurer wants this woman on the currency
Does the Treasurer of the United States think that a woman’s face will soon grace U.S. currency?
On Wednesday at Fortune’s Most Powerful Women “Evening With…” dinner in Washington, D.C., U.S. Treasurer Rosie Rios spoke about the outlook for equal play, gender-wise, on U.S. money.

Indexes & Index Products

UBS: Chinese A shares unlikely to make MSCI in June
EJ Insight
China’s A-share market is unlikely to make it to the MSCI emerging market index in June or any time before a planned Shenzhen-Hong Kong stock trading platform comes on stream, UBS said Thursday. David Rabinowitz, UBS head of direct execution services for Asia, said the A-share market is not MSCI-ready because investors cannot access broader sectors of the mainland’s equity market. They can invest in A shares through the Hong Kong-Shanghai stock link but these are heavily skewed toward the financial sector, he said in a teleconference.

Russell Rebalancing Will Bring Massive Buy Orders for 5 Key Stocks
24/7 Wall St.
With April coming to a close on Thursday, it is time for yet another rebalancing of some of the biggest indexes on Wall Street. At the close on Thursday, the Russell 2000 and the Russell 1000 will have enormous buy and sell orders hit the tape as the stocks in the indexes are rebalanced to represent the proper current weighting.

Comparing mutual funds and exchange traded funds
This look inside mutual funds and exchange traded funds shows how each of these investment types work, and how each of them handle risk.


U.S. Mint Eagle gold coin sales slide 37 pct in April
The U.S. Mint’s sales of America Eagle gold coins in April fell 37 percent from March, while 2015 sales so far have dropped for the second straight year, government data showed on Thursday.

Russia is buying gold, but few others are
The Economist
UNCERTAINTY is supposed to lift the gold price. But neither upheaval in the Middle East, nor the travails of the euro zone, nor startlingly loose monetary policy in the rich world is brightening the spirits of those who swear by bullion.

Barrick Gold Earnings Review: Lower Gold Prices And Shipments Weigh On Q1 Results
Barrick Gold Corporation, the world’s largest gold producer, released its first quarter results on April 27 and conducted a conference call with analysts the next day. As expected, lower realized gold and copper prices, as well as lower gold shipments, negatively impacted the company’s Q1 results. The company’s adjusted net earnings, which exclude the impact of non-recurring items such as impairments, fell from $238 million in Q1 2014, to $62 million in Q1 2015. Revenues stood at $2.25 billion in Q1 2015, lower than the $2.65 billion in revenues reported in the corresponding period of 2014.

Gold Prices Inadvertently Spur Make In India’s Manufacturing Push
Current volatility in the gold markets has led to a new wave of ‘Make In India’ that is taking place at home – notably in the jewelry segment.
Before starting, it is important to note that India’s gem and jewelry industry is a hefty contributor to the country’s economy, comprising up to seven percent of GDP.

Goldcorp Earnings Trail Estimates as Costs Rise, Gold Falls
by Christopher Donville & Liezel Hill, Bloomberg
Goldcorp Inc., the world’s biggest gold producer by market value, reported first-quarter earnings that missed analysts’ estimates after costs increased and gold prices fell.
The net loss was $87 million, or 11 cents a share, compared with net income of $98 million, or 12 cents, a year earlier, the Vancouver-based company said Thursday in a statement. Earnings excluding one-time items were 1 cent a share, trailing the 9-cent average of 16 estimates.

The Oil Slump Is Emptying the Stores of Dubai
The historic Dubai marketplace that calls itself the City of Gold is glittering less these days.
Under streets and alleys covered by roofs to protect window shoppers from the intense desert sun, more than 300 stores peddle everything from ingots to Bedouin jewelry. The Dubai Gold Souk had become one of the largest such marketplaces, offering tax-free precious metal, as Persian Gulf oil wealth ballooned in the past few decades.
Now, with the plunge in crude throttling economies across the Middle East, gold buyers are harder to find. Demand for the metal is slowing in the region and Dubai has seen a drop-off in some visitors. Shopkeepers say sales are declining because tourists from Saudi Arabia and Russia have less cash to spend. Sellers offer discounts for gold that two years ago fetched a premium.

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