First Impressions

CME Europe CEO Robert Ray Passes Away
John Lothian
Longtime exchange and brokerage executive Robert Ray passed away Thursday of a cardiac arrest in Atlanta, according to sources.

Bob Ray, 60, was serving as the CEO of CME Europe at the time of his death. He moved to London to run the exchange’s European and Asian business interests a couple of years after the CME Group bought the Chicago Board of Trade in 2007. Ray was a senior executive of the CBOT at the time the CME acquired them.

Ray also worked in senior trading and derivatives business development roles with Robertson Stephens Inc., Dean Witter Reynolds Inc., Carr Futures and Continental Grain Company. He had also previously worked at the Chicago Mercantile Exchange from 1984 to 1986 as director of financial marketing and product development.

He was known for his humor and straight talk.

For the rest of the article, and quotes from Peter Wind, Maria Gemskie, Bernie Dan, Walt Lukken and Simon Rostron, visit the JLN blog at

***** If you have a reflection on Bob Ray you would like to share, for publication in the story above, please email me at

***JM: See also the Bloomberg article at

Quote of the Day

“Jawboning rarely works if there’s money to be made. History doesn’t repeat itself but sometimes it rhymes — I certainly have those concerns.”

Mark Calabria, director of financial regulation studies at the Washington-based Cato Institute in the story, “Banks Enriched by Junk Resist U.S. Regulator Standards”.

Lead Stories

U.S. Adds 175,000 Jobs; Unemployment Ticks Up to 6.7%
The U.S. labor market in February picked up from recent months, though growth remained measured and the unemployment rate stubbornly high. U.S. nonfarm payrolls increased by a seasonally adjusted 175,000 in February, the Labor Department said Friday.

LSE’s fixed-income trading platform to acquire
MTS, the electronic fixed-income trading platform majority-owned by the London Stock Exchange (LSE), has agreed to acquire U.S.-based corporate and emerging markets bond trading platform

***DA: Lots of musical chairs these days among trading platforms.

Banks Enriched by Junk Resist U.S. Regulator Standards
More than five months ago, the Federal Reserve and Office of the Comptroller of the Currency told some of the biggest banks to improve underwriting standards for non-investment-grade loans. The market is showing few signs of tightening as lenders chase lucrative fees.

***DA: The powers that be have remained committed to providing a systemic backstop, so “prudent investing” can almost be called a violation of fiduciary responsibility.

China Heralding $1.5 Trillion Emerging Debt Wall: Credit Markets
Ye Xie and Selcuk Gokoluk – Bloomberg
A surge in interest rates and the worst currency rout since 2008 in developing nations from Russia to Brazil are inflating corporate borrowing costs as $1.5 trillion of obligations come due by the end of 2015.

***DA: Subprime 2.0?

Zombies Spreading Shows Chaori Default Just Start: China Credit
The number of Chinese companies with debt double equity has surged since the global financial crisis, suggesting the first onshore bond default won’t be the last.

***DA: Braaaaaiiinnns.

ECB holds rates, hints at all-or-nothing policy stance
The European Central Bank left interest rates on hold and unveiled no other measures to bolster a fragile euro zone recovery on Thursday, despite forecasting low inflation for years to come.

Greek bank Piraeus set to return to capital markets
Christopher Thompson in London and Kerin Hope in Athens –
Piraeus Bank is poised to become the first Greek bank since the eurozone crisis to return to capital markets, in a crucial test of investor readiness to lend to banks in the region’s recession-battered periphery.

Monetary policy: No cushion needed, apparently
The Economist
THE Federal Reserve basically never sees a recession coming (at least when it isn’t busily creating one to whip inflation). In early 2008, when America was already in what would become the deepest of all postwar recessions, the Fed was still projecting quite healthy GDP growth in both 2008 and 2009. This blindspot is not as absurd as it sounds.

***DA: One problem is the Fed has to play “cheerleader” at times, since consumer expectation (“confidence”) is so closely tied to economic activity.

The face behind the euro
David Keohane | FT Alphaville
We know who he is, we just don’t get what he’s doing. He does so like confounding expectations on his island of stability.

***DA: They have cheerleaders in Europe as well.

EM’s dark debt squeeze exposure
Izabella Kaminska | FT Alphaville
If you take the blue pill, the story ends. You wake up in your bed and believe exactly what the statistics tell you to believe. You take the red pill — you stay in Wonderland and I show you what the statistics just can’t see. What we’re talking about is hidden debt.

The Euribor effect
FT Alphaville
So, what do Euribor and Barbra Streisand have in common? Bar declining popularity that is?

***DA: Great parallel. If you want to see it live, better be willing to pay up. The oldies are available for free on YouTube. The only difference is Euribor quotes are of value to me.

Banks to return 11.4 billion euro of crisis loans to ECB next week
Banks will return 11.401 billion euros ($15.78 billion) in crisis loans to the European Central Bank next week, more than six times than the amount that was expected, accelerating the drain of extra cash out of the euro zone financial system.

***DA: Recapitalizing banks by leaning on the ECB’s balance sheet.

Bank of England’s dilemma in staying abreast of evolving markets
Delphine Strauss and Daniel Schäfer –
The Bank of England’s entanglement in the foreign exchange market scandal highlights the difficulties a central bank faces in staying abreast of markets while avoiding any hint of complicity in dubious practices.

Central Banks

Five Takeways from Mario Draghi’s ECB Press Conference
Geoffrey T. Smith – MoneyBeat – WSJ
European Central Bank President Mario Draghi’s monthly press conference was a low-key affair. A month ago, with inflation grinding lower and politicians complaining about the strength of the euro, there had been hints of action, and the message had been essentially to wait until March, when there’d be more data.

***DA: Takeaways could lead to giveaways.

Dudley says threshold high for changing taper plans
The U.S. economic outlook would have to change substantially for the Federal Reserve to alter the pace at which it is winding down asset purchases, a top U.S. central banker said on Thursday.

ECB Leaves Rates Unchanged
The European Central Bank took no new stimulus measures at its monthly meeting despite very weak inflation, in a signal that officials are confident the economy is recovering and consumer prices will accelerate without further help.

Mersch Says ECB Alone Can’t Boost Business Lending Through ABS
Jana Randow – Bloomberg
European Central Bank Executive Board member Yves Mersch signaled that policy makers are relying on other institutions to rekindle the market for asset-backed securities in a bid to bolster lending to small companies.

CCP must for inter-bank forex swaps: RBI panel
Business Standard
A Reserve Bank of India (RBI) panel on reforms in over-the-counter (OTC) foreign exchange derivatives has recommended that clearing of interbank trades in foreign exchange forward and swaps should be mandatorily done on the central counter party (CCP) platform by the end of this month.


China’s renminbi bounces back
Josh Noble and Patrick McGee in Hong Kong –
The renminbi is poised to record its biggest weekly gain in more than two years, as China’s central bank stepped back from its campaign to weaken the currency.

Is This Satoshi Nakamoto, the Mysterious Creator of Bitcoin?
Paul Vigna – MoneyBeat – WSJ
Newsweek claims to have fingered Satoshi Nakamoto, the shadowy figure who created bitcoin in the last decade and simply disappeared into the ether as it took off.

***DA: He denies it.

Poland Watching Putin Puts Euro Option Back in Play: Currencies
Piotr Skolimowski and Maciej Onoszko – Bloomberg
The crisis in Ukraine is putting the question of Poland’s accession to the euro back on the agenda as the military standoff stirs memories of the Cold War. Central bank Governor Marek Belka said this week that eastern Europe’s biggest economy should reconsider its reluctance to euro membership because of security concerns sparked by the conflict across the border.

***DA: Pick a side. And make sure you pick the right one.

Japan Won’t Impose Banking Laws on Bitcoin
Bitcoin trading platforms can, for now, operate freely under Japanese law, the government said Friday in a note that signaled a hands-off approach to the virtual currency.

***DA: Caveat emptor. The only law one needs in this case.

Forex futures may have longer trading hours to allow traders to align positions with US markets
The Economic Times
Currency futures, a paradise for traders, punters and corporates looking to cover exchange rate risks, could be in for a greater play in coming days.

Indexes & Index Products

Why the new shoeshine boy trade is shorting volatility
Izabella Kaminska | FT Alphaville
Chris Cole, of volatility fund Artemis Capital, has an insightful piece in the latest edition of the CFA Institute Conference Proceedings Quarterly warning about one of the most popular trades of recent times: the shorting of volatility via Vix ETPs.

***DA: All forms of insurance writing are the same. Collecting premiums is fun; paying claims is not. The market has not filed a claim since 2009.

NASDAQ OMX Global Indexes Now Available Through eVestment
The NASDAQ OMX Group, Inc. a market leading provider of innovative, transparent indexes, announced the following 19 NASDAQ Indexes are now available to clients of eVestment’s suite of Analytic solutions for institutional investors:

Leveraged products lead recovery in Europe’s structured investment market
Richard Jory –
Germany continues to top listed structured products issuance in Europe, says Eusipa. But markets in Italy, the Netherlands and Sweden also show strong signs of recovery, led by the popularity of leveraged products

According To ETFGI: Global ETF And ETP Assets Reached US$2.44 Trillion, A New Record High, At The End Of February 2014


SNB Suffers Loss on Lower Gold Price
Neil MacLucas – The Wall Street Journal
A sharp fall in the value of gold pushed the Swiss National Bank to a $10.4 billion loss in 2013, forcing it to cancel dividends for the first time in its 107-year history.

Gold Reverses Gains On Better-Than-Expected Jobs Number
Maggie McGrath – Forbes
U.S. stocks are on the rise Friday morning, following the news that the U.S. added 175,000 jobs in February, 25,000 more than economists had predicted. But with the Dow, Nasdaq and S&P 500 heading upwards on the news, gold is losing the ground it gained earlier in the week on investor fears over the crisis in Ukraine.

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