Creative Juice: Sir Ken Robinson and FIA Boca 2015
Doug Ashburn – JLN
At each year’s FIA Boca conference, a certain topic, issue or person becomes “the thing everyone talks about.” It may be an impending rule, a disruptive new technology, or an outlandish comment made at the exchange leader panel. Two years ago it was then-CFTC chairman Gary Gensler displaying his dance moves after planting a rumor he would be up for another stint as head of the regulator. In 2007 it was the envelopes slid under the hotel room doors of Charlie Carey and Bernie Dan announcing ICE‘s competing bid for the CBOT.
This year it was last Wednesday’s luncheon keynote by creativity expert Sir Ken Robinson. Robinson, whose lecture, “How Schools Kill Creativity” is the most popular TED Talk of all time, offered up 20 minutes of the most thought-provoking, intelligent and laugh-out-loud funny commentary ever on display at a Boca conference.
From Wednesday on, at every meeting or social engagement I attended, the name Sir Ken Robinson was dropped at some point, and it was as though each person received a personally gift-wrapped message.
Quote of the Day
“Recently, this supposition of regulatory capture has become as pervasive as it is false. I have never experienced a situation that an examiner was so close to an institution that the examiner went easy on that institution.”
Rodgin Cohen in the story, “Top Wall Street Lawyer Slams Regulatory Environment”.
What Your N.C.A.A. Brackets Teach About Investing and Bias
The main draw of the N.C.A.A. men’s basketball tournament begins Thursday, and the New York Times bracket is a fun way to test your predictions in a system that, like financial markets and most forms of sports betting, rewards you for taking an against-the-grain pick that proves accurate.
Expect ‘Trench Warfare’ Among Investment Banks — Report
A squeeze in fixed income liquidity, stripped-back balance sheets, low interest rates and big capital requirements are making the investment banking world and increasingly scrappy place for returns.
The latest tome from consultants at Oliver Wyman and Morgan Stanley, which takes in the views of asset managers with over $10 trillion under management together with analysis of major banks, foretells a fairly gloomy future.
Here are some of the key points.
Morgan Stanley shuffles wealth and securities executives -memo
Morgan Stanley has moved three executives into new roles in wealth management and institutional securities as part of its effort to get those two businesses to produce more revenue by collaborating, according to an internal memo viewed by Reuters.
U.S. judge dismisses lawsuit over $13 billion JPMorgan Chase settlement
A U.S. federal judge tossed out a lawsuit brought by non-profit group Better Markets that sought to block a $13 billion settlement JPMorgan Chase & Co reached with the U.S. Justice Department over shoddy mortgage loans sold to investors before the financial crisis.
Judge Beryl A. Howell accepted a motion by the Justice Department filed last May to dismiss the lawsuit, which argued that the group founded in 2010 to advocate for tough Wall Street reforms lacked standing to sue.
Fragmented European landscape and comparison with the US
European Central Bank
Top Wall Street Lawyer Slams Regulatory Environment; Rodgin Cohen calls environment ‘confrontational and skeptical’
By JUSTIN BAER, WSJ
One of Wall Street’s top lawyers says strains between banks and regulators have never been greater.
Banks Win 9-Month Swap Margin Rules Delay From Basel Group
Banks won a delay in the introduction of minimum global rules on the collateral needed to back trades in the $691 trillion market for swaps and other over-the-counter derivatives. International regulators said the date for beginning to phase in the measures would be September 2016 compared with previous plans for a December 2015 start. The rules were approved in 2013 to ensure lenders have sufficient safeguards in place when a trading partner defaults.
SEC Shifts Focus to Ratings Firms, Fund Valuations As Crisis-Era Cases Fade
By ARUNA VISWANATHA, WSJ
As U.S. securities regulators turn their attention away from the financial crisis, they’re looking more closely at credit rating firms and fund valuation issues, the top enforcer at the Securities and Exchange Commission will tell lawmakers on Thursday.
Senior Banker Predicts Robust Deal-Making Will Continue
Dealbook – NY Times
If the opening comments from one of the senior deal makers at the Tulane Corporate Law Institute here are to be believed, the good times for mergers and acquisitions will continue to roll.
In his speech, Greg Weinberger — named last week as Credit Suisse’s co-head of global mergers — said that the conditions for robust deal-making aren’t likely to change anytime soon.
But surprisingly, he also said that the red-hot burst of shareholder activism was due for a slowdown.
Warnings Raised of a Greek Exit From the Euro
Just a few weeks ago, fears that Greece might exit the euro union subsided when Europe extended its financial bailout. But as a new war of words escalates between Athens and its creditors, talk of a “Grexit” is heating up.
In the last several days, European and American banks, think tanks and ratings agencies have issued a fresh round of warnings and studies calculating the damage to the currency union if Greece were to default on its debts or stop using the euro.
Fed to soon propose debt rule for bank emergency plans: Tarullo
The Federal Reserve is expected to issue a new rule in the coming months involving a long-term debt requirement for banks’ emergency plans, a top Fed official said on Thursday.
Factbox: How low can they go? Central bank policy easing in 2015
Sweden’s central bank surprised markets on Wednesday by cutting interest rates further below zero and increasing its bond-buying stimulus program, reflecting its determination to prevent the crown’s recent rise from snuffing out a pick-up in inflation.
It was the Riksbank’s second decisive move in a month, but startled markets because it came between scheduled policy meetings.
ECB Makes Life Tough For Its Neighbors
The European Central Bank is piling pressure on the eurozone’s neighbors.
The euro’s decline, accelerated by the ECB’s decision in January to launch EUR60 billion ($63.6 billion) in monthly purchases – buying actually started in March – is starting to boost the eurozone economy, but it’s also causing ructions across its borders.
‘Has the World Changed in 24 Hours?’ – Strategists on Fed
Federal Reserve Chairwoman Janet Yellen gave markets a massive jolt on Wednesday.
The Fed removed the word “patient” from its statement on the timing of interest rate rises, as expected. But Ms. Yellen made it abundantly clear the central bank is in no hurry, catching out investors who had increasingly been betting on a hike in June.
Here’s how analysts and investors reacted to the Fed meeting:
Fed Pullback Fuels Treasury Inflation Protected Debt Demand
The U.S. Treasury Department can thank the Federal Reserve for the surge in demand at Thursday’s auction of inflation-protected bonds.
Currency war by the numbers
HSBC: This Is the Beginning of the End of the U.S. Dollar’s Bull Run
In a note to clients, HSBC’s David Bloom argues that the U.S. dollar’s bull run is nearing its end.
U.S. firms use cheap euros to access dollars, but window closing
The stark divergence between U.S. and euro zone monetary policy has made it more attractive than ever for U.S. companies to raise cash in euros and swap it back into dollars this year, but that window of opportunity could be closing.
The euro/dollar cross currency basis swap, effectively the cost of swapping one currency into the other without the exchange rate risk, recently showed the highest premium for dollars in more than two years.
The Not-So-Almighty Dollar
The dollar is pennies away from being equal to EUR1 for the first time since 2002. U.S. manufacturers fret that the stronger currency will kill their sales. Yet American policymakers seem blasé. Secretary of the Treasury Jacob Lew says a strong dollar is in America’s interest, and Federal Reserve Chair Janet Yellen, at her March 18 press conference, said it “reflects the strength of the U.S. economy.”
Thomson Reuters February FX volumes fall 10 pct from last month
Daily foreign exchange volumes on currency platforms run by Thomson Reuters fell back to $355 billion last month from $398 billion in January, the company said in a statement on Wednesday.
BNY Mellon nears $700-plus million forex cases settlement – source
Bank of New York Mellon Corp is nearing an agreement to pay just over $700 million to settle allegations that the bank overcharged pension funds and other clients for foreign exchange services, according to a person familiar with the probe.
‘Evo’ admins make off with $12M in bitcoins after closing site
By James Covert, NY Post
Dude — this is the biggest bitcoin bummer since Silk Road was taken down 21 months ago.
‘The Age of Cryptocurrency,’ by Paul Vigna and Michael J. Casey
Money, “The Age of Cryptocurrency” explains, is “a medium of exchange, a unit of account and a store of value.” But for Schopenhauer it was “human happiness in the abstract,” and for Dostoyevsky “coined liberty.” These passion metaphors reflect the febrile excitement about Bitcoin that Paul Vigna and Michael J. Casey, both of The Wall Street Journal, share in their wide-ranging, interesting account of the origin, past and possible future of this virtual-money wannabe.
Indexes & Index Products
Commodity Index Gains Ground in Short Month
Alan Campbell & Anne Riley – Bloomberg
The Bloomberg Commodity Index inched into positive territory in February for the first time since June. The index, which takes into account energy, grain, metal and livestock prices, gained 2.6 percent in February.
China A-shares may be included in MSCI EM index by end-2015 – HSBC
“We forecast that the A-share market cap will increase to $10 trln by 2020, with foreign ownership rising to 10 pct,” HSBC says in a report
MSCI Introduces Diversified Multi-Factor Indexes
Research has shown that stocks reflecting certain factors have, over time, provided a higher return than the overall market. MSCI Diversified Multi-Factor Indexes use Barra risk tools to construct indexes that track the performance of four of these factors – Value, Momentum, Quality and Low Size – while keeping risk at the level of an underlying parent index. These indexes can be used by institutional investors looking to construct diversified portfolios that are exposed to multiple factors.
BlackRock’s New Breed of Exchange-Traded Bond Fund Prizes Stability Over Swagger
You will not see Scott Radell on CNBC. Nor does he inhabit a jaw-dropping mansion. While he may not live the life of a swaggering bond market pro, Mr. Radell, a bond manager at the fund giant BlackRock, is challenging a strategy that has rewarded some of his flashier peers: the pursuit of high-risk, high-return investments.
Study: Is There a Better Small-Cap Index?
If your clients are seeking small-cap domestic stock exposure via an index fund, chances are you are looking at portfolio based on the Russell 2000 index, which dominates the category. But a new study by S&P Dow Jones Indices says your clients will profit more from buying a fund tracking S&P’s own SmallCap 600 index.
PowerShares Drops Research Affiliates, Adds Russell, on Nine ‘Smart-Beta’ ETFs
Nine PowerShares “smart-beta” exchange-traded funds will transition to indexes created by Russell Investments from Research Affiliates after the latter firm curtails publication of the index family.
Brave new world for the Dow as Apple joins?
Apple solidified its Wall Street leadership by officially joining the Dow Jones industrial average after the close on Wednesday. The iPhone maker replaced AT&T in the 30-stock index as Visa had a 4-for-1 stock split.
Commodities explained: The new gold fix
By Henry Sanderson, Bloomberg
London is the centre of the gold world, accounting for about three quarters of the world’s bullion trading. On Friday the twice-daily process used for almost a century to “fix” the price of precious metal goes digital.
Options Market Sees Bottom in Gold With Urgency on Hold at Fed
With gold showing signs of recovery after its longest slump in 17 years, investors are staking a claim that the precious metal is reaching a bottom.
Short interest in the SPDR Gold Shares exchange-traded fund is near the least since April, according to data compiled by Bloomberg and Markit Ltd. Investors own about 680,000 options betting on a decline in the ETF, compared to about 1.4 million contracts wagering on a rise. That’s around the lowest ratio of puts to calls since September, Bloomberg data show.
Fed Push for Inflation Implies Support for Gold Price, Miners
By Paul Ausick, 24/7 Wall Street
Lacking significant inflation to help drive up demand, gold prices have dropped more than $200 an ounce in the past 12 months. However, it appears that gold is going to get some help as the U.S. Federal Reserve and other central banks continue to keep policy rates low in an effort to fight off deflation. With inflation rates still well below the Fed’s 2% target, and its own latest estimate that the target will not be reached until 2017, the Fed may no longer be “patient,” but it is not prepared to make any near-term move to raise rates.
China to allow more firms to trade gold, may impose curbs if needed
China’s central bank on Thursday detailed plans on granting more licences for gold imports and exports, while maintaining that it could impose trade restrictions when necessary.
A further opening up of the world’s second biggest bullion market would underpin demand for the metal while also boosting global prices that have dropped 9 percent in two months.