First Impressions

Share Your Secret Sauce! Alan Synder Says Emerging Managers Should Provide More Details

Fund managers are faced with a myriad of challenges from trading and risk management to compliance and operating a business. But the challenge of marketing and raising money can be most daunting of all.

Jim Kharouf, editor-in-chief of John Lothian News, spoke with Alan Snyder, managing partner of Shinnecock Group, who says there are several keys to attracting and keeping institutional investors, and one of them is “sharing your secret sauce.”

Snyder said that providing deeper information about how a fund trades is part of the real key in the sales process – engendering trust.

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Quote of the Day

“The main story really is that the recovery is very weak, very fragile, and something has to happen. Markets are increasingly expecting they’ll have to do sovereign QE.”

Martin Van Vliet, an economist at ING Groep NV in the story, “Euro Economy’s Managers Aren’t Blinking in Market Rout”.

Lead Stories

US investors “rotating” back into bonds
Matthew C Klein – Financial Times
In 2013, US mutual fund investors started moving money out of bonds and into equities. Some thought that this was the beginning of a “great rotation” in asset allocations that would undo the changes that have occurred since the crisis. That might happen eventually but the trend has gone into reverse this year.

Another Market Monsoon Greets Fed Curtailing QE Buying
Callie Bost and Inyoung Hwang – Bloomberg
For the third time since the end of the financial crisis, market volatility is soaring at the same time the Federal Reserve walks away from a stimulus program.

Currency Trading Is Both Boon and Bane for Wall Street
Dakin Campbell and Madeline McMahon – Bloomberg
Foreign-exchange trading is once again fueling revenue at Wall Street banks. It also remains one of their biggest headaches.

Banks blame bond volatility on tighter regulation
Tom Braithwaite and Vivianne Rodrigues in New York – Financial Times
Wall Street’s biggest banks have placed much of the blame for violent swings in US government bond prices over the past 24 hours on new bank safety regulations that they say have reduced market liquidity.

Euro Economy’s Managers Aren’t Blinking in Market Rout
Simon Kennedy, Catherine Bosley and Scott Hamilton – Bloomberg
German Chancellor Angela Merkel and European Central Bank President Mario Draghi aren’t blinking yet.
The longest losing streak in European stocks in 11 years and the weakest inflation since 2009 today intensified pressure on the managers of the euro area’s already ailing economy to deliver fresh stimulus programs.

The “I told you so” trade in credit is to wait and see
Dan McCrum – Financial Times
Who doesn’t like to start the day with a nice hot cup of vindication? There will be plenty of time to recognise those who have been warning about a lack of real liquidity and the chance of real volatility later. For now the question is what to do?

Could the liquidity crisis be back?
Izabella Kaminska – Financial Times
So says, at least, Sebastien Galy from SocGen on Thursday.

U.K. Government Bonds End Longest Winning Streak in Four Years
Lucy Meakin – Bloomberg
U.K. government bonds fell, halting 10-year gilts’ longest winning streak since 2010, amid speculation that investors pushed yields down too far on bets the Bank of England will keep interest rates at a record low.

Central Banks

Central bankers may have no quick fix as markets swoon, economy weakens
Howard Schneider – Reuters
Global central bankers, eager to see the economy stand on its own feet, faced the rude reality this week of market turmoil threatening already faltering growth and prolonging world reliance on easy money.

Bullard Says Fed Should Consider Delay in Ending QE
Steve Matthews and Craig Torres – Bloomberg
The Federal Reserve should consider delaying the end of its bond purchase program to halt the decline in inflation expectations, said St. Louis Federal Reserve Bank President James Bullard.
Speaking in an interview today with Bloomberg News, Bullard said U.S. economic fundamentals remain strong and he blamed the market turmoil on downgrades in the outlook for Europe.

What Yellen Needs to Learn From Sweden, Fast
Simon Kennedy – Bloomberg
Forget the bigger-than-forecast drop in U.S. retail sales, the surprising tumble in U.K. inflation to a five-year low, and the slide in German investor confidence.
For central banks around the world, the most informative piece of economic data released anywhere this week was the news that Swedish consumer prices fell 0.4 percent in September from a year earlier.

U.S. Says China Shows Some ‘Willingness’ to Let Yuan Rise
Jeanna Smialek and Ian Katz – Bloomberg
The U.S. said China has shown “some renewed willingness” to let the yuan strengthen while reiterating the currency “remains significantly undervalued.”
In a twice-yearly report to Congress on foreign exchange, the Treasury Department said changes to China’s currency policy remain incomplete and the world’s second-largest economy should allow the market to play a greater role in setting the yuan’s value. The report covering the first half of this year concluded that no country was designated a currency manipulator.

Currency crisis medicine earns Raghuram Rajan Euromoney award
Euromoney Magazine
Successfully tackling the currency crisis has earned Reserve Bank of India Governor Raghuram Rajan the Euromoney magazine’s Central Bank Governor of the Year Award for 2014.

Has the Bank of England Learned From the Past?
Alen Mattich – MoneyBeat – WSJ
Has the Bank of England learned anything from the years before the financial crisis? Then, unemployment was at 30-year lows, house prices were booming and yet interest rates were maintained at moderate levels because inflation was well behaved even though the government was running a pro-cyclical fiscal policy.


‘Perfect storm’ on the horizon for commodity FX
Solomon Teague – Euromoney Magazine
Commodities could be facing further weakness, amid falling demand in China and elsewhere. All eyes are again on the US, where strong growth could support prices and prevent a further sell-off of commodity currencies.

Bank of Russia Raises Ruble Trading Band to Let Currency Fall to New Lows
Andrey Ostroukh – WSJ
The Bank of Russia continued adjusting the ruble trading band, letting the ruble weaken gradually to new all-time lows, the bank’s data showed Thursday. The central bank said it pushed the ruble’s trading band 25 kopecks higher to 36.95-45.95 rubles per euro-dollar basket on Wednesday.

Indexes & Index Products

London Stock Exchange Welcomes 150th Fixed Income ETF
London Stock Exchange today welcomes the 150th fixed income ETF to its markets, the SPDR Thomson Reuters Global Convertible Bond UCITS ETF. Launched by State Street Global Advisors, the product gives investors an opportunity to gain exposure to global convertible bonds.

‘Fear index’ spikes as investors unload European stocks
Eric Reguly – The Globe and Mail
Wall Street’s volatility index, known as the “fear index,” or Vix, spiked to its highest level since the height of the euro zone crisis in 2012 as investors took fright, unloaded European equities and piled into sovereign bonds.
The trades were triggered by rising fears that the global economy is slowing down quickly – telegraphed by plunging oil prices – that Ebola could spread at an alarming rate and that the withdrawal of the U.S. Federal Reserve’s quantitative easing program will leave the markets even more vulnerable.


LME takes charge of London platinum, palladium fixes, eyes on gold
The London Metal Exchange, owned by Hong Kong Exchanges and Clearing Ltd , will take charge of London’s platinum and palladium pricing, also known as “fixes”, from Dec. 1, replacing a teleconference with an electronic platform.
The unexpected move marks a stunning comeback for the LME, which failed to secure administration of the century-old London silver price benchmark – the first to go electronic in a wave of reform for precious metals pricing procedures.

Platinum Falls Below Gold for First Time Since April 2013
Platinum dropped to the lowest in more than a week in London, falling below the price of gold for the first time since April 2013, on concern slowing economic growth will curb demand.
Platinum is mostly used for automotive catalytic converters, with industry accounting for more than 50 percent of usage, according to Johnson Matthey Plc. That compares with about 10 percent for gold, which reached an almost five-week high yesterday as investors sought a haven and after the Federal Reserve indicated a worldwide economic slowdown may delay interest-rate increases.

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