First Impressions

Latin America: Opportunities and Risks
CME Group Chief Economist Blu Putnam recently hosted a webinar on Latin America, in which he gave a thorough assessment of the current macroeconomic environment and trends. He focused on monetary policy and inflation, the effects of U.S. and European economies, and FX and equity market scenarios, risks and opportunities. Well worth 34 minutes of your time.
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John Ruth, CEO – ABN AMRO Clearing Chicago – Career Builder
JohnLothianNews.com

“If you want to get noticed in your organization, be someone who can solve problems.”

It’s your first day at a new company. You have yet to learn the ropes and you need to get yourself acquainted with the basics. You’re not ready to make an immediate impact on your organization, right? Wrong. John Ruth, CEO of ABN AMRO Clearing Chicago, believes that everyone in an organization – from interns and new hires to the company’s established veterans – can make a positive impact. Ruth says that problem solvers are extremely important assets for an organization. Those are the people who get noticed quickly and can unlock more possibilities in their career advancement. Along with managing career development, Ruth discusses the importance of adapting to change and what it can mean for not just an individual, but an entire organization.

Watch the video »

Quote of the Day

The FOMC will ultimately hold its nose and expand its RRP operations to a trillion dollars or more if that proves to be necessary to maintain a firm floor under rates.

Lou Crandall, chief economist at Wrightson ICAP LLC, from the Reuters story “Wall Street sees holes in Fed’s new policy-tightening plan”

Lead Stories

U.S. Treasury Market Goes Off Script
Min Zeng – WSJ
The crosscurrents roiling the bond market intensified Thursday, as the gap between short- and long-term U.S. Treasury yields narrowed in the latest sign of uncertainty over the pace of U.S. growth.
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***He’s ad-libbing again. Cut to a commercial, quick!

Bonds set to take centre stage in mergers and acquisition financing
Louise Bowman – Euromoney Magazine
Debt capital markets bankers have so far watched the boom in M&A activity with a mixture of envy and anticipation. But they’re increasingly confident that a buyer-led bond boom is on the way.
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***DA: Just getting cranked up? I thought it had been going on for a while already.

SEF Trading Volumes Emerging From Summer Doldrums
Ivy Schmerken – Wall Street & Technology
Tradeweb’s SEF saw a twenty-fold increase in interest-rate derivatives trading volume in the first two weeks of September, while Tabb Group looks for signs of summer doldrums turning around.
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US margin rules ‘punish lenders’, warns CFTC’s Giancarlo
Peter Madigan – Risk.net
The Commodity Futures Trading Commission (CFTC) has unanimously approved proposed rules on margining for non-cleared swaps, despite one commissioner’s concerns that the rules will apply to more US entities than would be the case under the equivalent international standards.
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***DA: Some would argue that lenders are deserving of a little punishment.

Bond markets: Swimming not drowning
Louise Bowman – Euromoney Magazine
Regulators have been strident, if rather late, in their concern over the risk that short-term retail money now represents in today’s high yield corporate bond market. So when retail funds began to sell off in late July many braced for the worst. But by the end of August it was as if nothing had happened. The bond market’s ability to adapt may be greater than Federal Reserve chair Janet Yellen believes.
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***DA: Dog-paddling.

Citigroup takes Argentine bond payment case to U.S. appeals court
Reuters
Citigroup argued before a U.S. appeals court on Thursday it faces “a serious and imminent hazard” if it cannot process another interest payment by Argentina on $8.4 billion in bonds the country issued under local laws following its 2002 default.
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***DA: Defaults have repercussions.

Central Banks

Wall Street sees holes in Fed’s new policy-tightening plan
Jonathan Spicer – Reuters
No sooner did the Federal Reserve reveal its plan for eventually tightening U.S. monetary policy than many on Wall Street flagged problems with the mechanics of the strategy, and said more adjustments would have to come.
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***DA: Ready, fire, aim!

South African Central Bank Governor to Step Down in November
Patrick McGroarty – WSJ
South African Reserve Bank Governor Gill Marcus said Thursday that she will step down when her contract expires in November, bringing to an end a tenure that turned the country’s top banker into a persistent critic of her government’s economic policy.
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Yellen fights a war against impatience
Robin Harding in Washington – Financial Times
Janet Yellen is fighting a war against impatience. After years of low interest rates, and eight months in the job during which not a lot has happened, there is much pressure from markets and some officials within the US Federal Reserve for action.
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***DA: I don’t care what happens, as long as I don’t get blamed for it.

Currencies

Dollar, pound surge in Asia after Scotland vote
Yahoo! News
The pound rallied against major currencies Friday as Scotland rejected independence from the United Kingdom, while the dollar closed in on the 110 yen level for the first time in more than six years.
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***DA: Raise your glasses and say a toast to the queen; the U.K. survives.

A three-pillar-strategy for the Euro
Opinion piece by Benoît Cœuré, Member of the Executive Board of the ECB,
and by Jörg Asmussen* for Berliner Zeitung and Les Echos,
Europe is facing economic challenges that are unprecedented in the recent history of our Union. Seven years have now passed since the financial crisis erupted. The euro area has turned the corner, but it is still not back to a sustainable growth path and the job creation that this would bring.
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SGX Boosts Yuan Aspirations with New FX Contracts ~ Welcomes Bank of China as First Chinese Settlement Bank
Singapore Exchange is adding new Asian foreign exchange futures contracts on Chinese Renminbi, Japanese Yen and Thai Baht, to further augment its successful suite of FX offerings.
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US Fed’s hawkish stance won’t affect rupee much
Business Standard
Despite the US Federal Reserve’s hawkish language, it is felt the rupee will trade at 60-62/dollar through the next few months. Narrowing of India’s current account deficit (CAD), lower inflation, comfortable foreign exchange reserves and hopes of a sovereign rating upgrade are seen as aiding the currency.
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Japan finance minister Aso: No talk on forex with U.S. Treasury Secretary Lew
Reuters
Japanese Finance Minister Taro Aso said on Friday there was no discussion on currency moves at his meeting with U.S. Treasury Secretary Jack Lew.
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Why Germans pay cash for almost everything
Matt Phillips – Quartz
As banks, technology giants and would-be disruptors such as Square scrummage over the payment system of the future, German consumers seem perfectly happy with the payment system of the past. Germany remains one of the most cash-intensive advanced economies on earth.
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***DA: They do not care much for mortgages, either.

Indexes & Index Products

Schwab expands commission-free ETF platform, putting focus on cost
Ashley Lau – Reuters
Charles Schwab Corp said on Thursday it added 65 exchange-traded funds to its commission-free trading platform, including a handful of alternative funds, citing demand from customers who want to invest in ETFs without paying online trade commissions.
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Vanguard Reaches $3 Trillion In Assets, Matching Entire Hedge-Fund Industry
Kirsten Grind – MoneyBeat – WSJ
An asset manager selling index funds from a leafy suburb of Philadelphia now has about the same amount of assets under management as the entire hedge fund industry. Vanguard Group reached $3 trillion in global assets under management for the first time, a company spokesman said Thursday, a record for the country’s largest mutual fund firm.
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MSCI declares first dividend, doubles buyback program
Reuters
Stock market indexes provider MSCI Inc declared its first-ever quarterly dividend and more than doubled its stock repurchase program to $850 million from $300 million.
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ETFs outpacing retail stock funds by wide margin -Lipper
Luciana Lopez – Reuters
Investors in U.S.-based funds added a net $6.7 billion into stock funds in the week ended Sept. 17, data from Thomson Reuters’ Lipper service showed on Thursday.
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Gold

China set to win Asia gold pricing race with new exchange
Economic Times
The launch of the Shanghai Gold Exchange’s international bourse with yuan-denominated contracts is the first in a slew of bullion contracts expected in Asia, including Singapore and Hong Kong, before the end of the year as the region aims to have pricing power as the top consumer of the metal.
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Silver’s ETF Demand Outpaces Gold by Most Ever: Chart of the Day
Bloomberg
The CHART OF THE DAY shows shares outstanding for the biggest U.S. silver ETF surpassing those for the nation’s largest gold fund by the most since 2006, when the iShares Silver Trust was created.
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What you need to know about the Denver Gold Forum
Financial Post
Unsurprisingly, many companies participating in this year’s Denver Gold Forum outlined their focus on reining in costs. In attention to lowering costs and pulling back on capital spending (both growth and sustaining), producers highlighted efforts to restructure their balance sheets and upgrade their portfolios via acquisitions and divestitures.
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That time three years ago, when investors temporarily lost their minds
Joshua M Brown – thereformedbroker.com
Joe Weisenthal has a post up this morning about the awful action in gold these past few years. He posted a chart of gold’s price action from FRED, which I’ve annotated to remind you of something that actually happened exactly three years ago – a moment in time at the end of the summer of 2011 during which the investor class had temporarily lost its collective mind.
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