First Impressions

Happy Fed Day
Doug Ashburn – JLN
The Federal Reserve board meets today to discuss the state of the economy and to decide the trajectory of interest rate policy. Is today the day the Fed removes the “considerable time” language from the canned statement? Is this the most we can expect? If so, it looks to be a slow news day economically.

We got our last pre-meeting glimpse of the state of the economy with the release of this morning’s consumer price index, and the number was less than stellar – down 0.2 percent nominally and unchanged ex-food and energy. The latter was the first non-increase in four years. So we may not even get a change in language today.

As a colleague reminded me yesterday, anyone who is watching this meeting to make trading decisions will eventually get exactly what he or she deserves. If you are a glutton for punishment, or if you need a break from your day job of watching paint dry, you can watch the meeting and press conference here.
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Ethan Kahn, Principal, Wolverine Trading, LLC – Exploring ETF’s
JohnLothianNews.com

“It’s a very competitive market out there. Constantly innovating and constantly adapting is what makes opportunities occur.”

Ethan Kahn, principal at Wolverine Trading, gives an explanation of ETF’s and shows why the product has become popular over the years. Kahn discusses the differences between ETF’s and mutual funds, breaking down how much lower the costs of ETF’s are and how there is more buying and selling flexibility compared to mutual funds. Finally, Kahn explains the importance of innovation and adapting in the financial industry, telling his audience that constantly changing with the industry is key to staying competitive.

Watch the video »

Quote of the Day

We’re not looking for any material change. We had a move lower and maybe the market is just taking stock of events.

Orlando Green, fixed income strategist at Credit Agricole, in the Bloomberg story “Treasuries Advance as Consumer Prices Drop Before Fed”

Lead Stories

Wary of Another ‘Tantrum,’ Emerging Economies Prep for Fed Rate Hike
Matt Day – MoneyBeat – WSJ
As the Federal Reserve debates the timing of a potential interest rate increase, some policymakers in the developing world aren’t taking any chances.
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Allianz Allies with Thomson Reuters for Bond Pricing
Max Bowie – WatersTechnology
German banking and insurance giant Allianz is to use Thomson Reuters’ independent pricing service to meet the firm’s fixed income pricing data needs around valuation and meeting international accounting standards.
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Startup Brings Pandora-Like Data Intelligence to Bond Voice Trading
Ivy Schmerken – Wall Street & Technology
Algomi is helping sales traders find the other side of less liquid bond trades, so that banks can become more efficient at voice trading.
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***DA: The human being takes another step toward obsolescence.

JPMorgan Debuts Company Debt Fund as Rebound Seen: India Credit
Anoop Agrawal – Bloomberg
Global fund managers are starting their first Indian corporate bond funds as credit risk drops amid Prime Minister Narendra Modi’s bid to revive the economy.
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Between Bridges: Federal Court Tosses Out Challenges to CFTC Cross-Border Guidance and Policy Statement
Gary DeWaal – Katten Muchin Rosenman
A United States federal court on September 16, 2014, mostly tossed out all legal challenges brought by three industry groups to the cross-border guidance and policy statement initially issued by the Commodity Futures Trading Commission on July 12, 2013, and made effective on July 26, 2013. This guidance sought to explain how the CFTC would apply the Dodd-Frank Act’s provisions related to swaps—Title VII—and its newly implemented swaps rules in the cross-border context.
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***DA: For everything you ever wanted to know about the ISDA/SIFMA/IIB suit, visit the page in MarketsReformWiki at /jlne.ws/1kfHVW4

Central Banks

Goldman Sachs on Fed Signals, Taboos and the Runaway Dollar
Katie Martin – MoneyBeat – WSJ
The Fed is unlikely to come up with radically new language later Wednesday to describe when it’s set to start raising interest rates just yet, according to Goldman Sachs GS +0.03%. One reason: last year’s ‘taper tantrum’ has left a bitter taste in the mouth.
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Treasuries Advance as Consumer Prices Drop Before Fed
Bloomberg
Treasuries advanced as the cost of living in the U.S. unexpectedly dropped in August before the Federal Reserve decides on the future path of interest rates in a policy meeting today.
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As Fed Meeting Looms, Options Traders Brace for Stock Swings
Saumya Vaishampayan – MoneyBeat – WSJ
Options traders are bracing for stepped up price swings in stocks around this week’s Federal Reserve meeting, but don’t expect an extreme or prolonged sell-off.
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***DA: Like the Spanish Inquisition, nobody expects an extreme or prolonged sell-off.

BOE Dissenters Fail to Attract Support
Paul Hannon And Jon Sindreu – WSJ
Two officials at the Bank of England who first pushed for an immediate rise in interest rates in August failed to attract additional support at the Monetary Policy Committee’s September meeting, according to minutes released Wednesday. The failure of Ian McCafferty and Martin Weale to gain support for their view makes it less likely that the benchmark interest rate will be raised this year.
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***DA: Let us charge, full speed ahead! Who’s with me? Uh, guys? Guys? Helloooo? Uh oh.

China Central Bank to Inject $81 Billion Into Top Lenders
KEITH BRADSHER – NY Times
China became on Wednesday the latest country to embrace economic stimulus measures, as its central bank reportedly agreed to lend 100 billion renminbi apiece, or $16.2 billion, to each of the country’s five main banks.
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5 Questions About ECB’s Lending Program
WSJ
The European Central Bank will announce Thursday how much banks borrowed in new four-year ECB loans aimed at boosting private-sector lending. The program, called Targeted Longer-Term Refinancing Operations, or TLTRO, was part of a June stimulus package that included interest-rate cuts.
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***DA: TLTRO – that is what I have on my license plate. It stands for “Toilet Row,” my old neighborhood.

Russia Central Bank Introduces Currency Swaps to Provide Liquidity
Alexander Kolyandr – WSJ
The Bank of Russia said Tuesday it introduced one-day currency swaps to aid banks “better management of the their short-term liquidity”.
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Currencies

Scotland must choose between independence and the pound
Krishna Guha – Financial Times
If Scotland votes Yes to independence the knee-jerk response in the markets is easy to predict: sell sterling, sell UK equities, sell Scottish financials and short Spanish debt on Catalonia fears. UK gilts may offer a safe haven but this is not certain given questions about the allocation of debt in divorce, enhanced risk of rump UK exit from the EU and potential contingent liabilities associated with a messy break-up of the UK.
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Euro carry trade the new ‘Bernanke put’
Solomon Teague – Euromoney Magazine
As the Fed prepares for rate hikes, the hope is that the ECB stands ready to take over its mantle as chief global liquidity provider, raising the spectre of the euro becoming a more attractive funding currency for carry strategies.
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Yen Slide Quickens as Pensions Head Overseas: Chart of the Day
Bloomberg
Japanese pension funds favoring overseas investments are helping send the yen down toward its biggest monthly loss this year, Nomura Securities Co. says.
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BitBeat: Is the Battle for Bitcoin’s Soul Already Over?
MoneyBeat – WSJ
We provoked a good deal of debate with last week’s piece on how bitcoin could advance beyond a narrow strategy of retail-focused marketing and instead aim to win over multinational businesses and governments, and when you come down to it, the debate illustrates the fight over bitcoin’s soul.
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Indexes & Index Products

Fed Bringing Stock Turbulence to Traders as VIX Climbs
Callie Bost and Jeff Kearns – Bloomberg
As investors try to decode the Federal Reserve’s next step, options traders are betting that regardless of what happens, it’ll be a rocky ride for stocks.
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Morning Agenda: Investors Reflect on Calpers Move
NYTimes
The California Public Employees’ Retirement System, the nation’s largest pension fund, has long been a trendsetter among public pension plans. So when Calpers said on Monday that it would eliminate all $4 billion of its hedge fund investments over the next year, the industry took note, Mary Williams Walsh and Alexandra Stevenson report in DealBook. The reasons for its decision — that hedge funds can just seem too complicated and costly — also resonate with many public workers, retirees and the plans’ trustees.
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Like Stock Splits? There’s an ETF for That
ETF Trends
Stock splits make for good headlines and some investors do like knowing they have more shares of a particular company, though those shares are not worth more (or less) simply because a share split occurred
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Gold

Shanghai gold trading platform given surprise launch date
Mark O’Byrne – Resource Investor
Today the Chinese government backed Shanghai Gold Exchange (SGE) brought forward the launch date of its international gold trading platform which is hosted in the city’s free trade zone (FTZ). The gold trading platform will be known as the ‘international board.’
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Singapore delays plans for gold contract
TODAYonline
Singapore has been forced to delay its plans for an exchange-traded gold contract because of technical issues, sources said yesterday, adding a dent to its ambitions of becoming South-east Asia’s gold trading hub.
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UBS and Goldman to miss out on Anglo’s pot of gold
Lucy Burton – Financial News
Goldman Sachs, UBS and Rothschild could have missed out on up to $25 million in fees after the proposed spin-off of AngloGold Ashanti fell through less than a week after being announced.
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