First Impressions

FIA Boca 2014 Exchange CEO Series Teaser

At the FIA Boca 2014 event, John Lothian News sat down and interviewed several Exchange CEOs about the competitive landscape, technology and industry growth. Stay tuned for our upcoming series.

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Quote of the Day

“We’re not in a crisis, we’re kind of recovering to a degree — and then the question is, how much can monetary policy do?”

Julia Coronado, chief economist for North America at BNP Paribas in the New York Times article: “Yellen’s Fed Will Sail Into Murkier Waters.”

Lead Stories

Yellen’s Fed Will Sail Into Murkier Waters
For the last several years, Fed officials largely agreed that more had to be done to reduce unemployment and revive inflation. As the economy recovers, however, there are signs that old differences are returning even as the Fed emphasizes clear communication as its primary policy tool.

**JK – Tapering without calling it tapering.

Taper Talk Slammed Strong Emerging Nations Most
Michael S. Derby – MoneyBeat – WSJ
New research argues emerging-market nations hit hardest in the run up to the Federal Reserve’s decision to cut back its bond buying were those whose financial houses were in the best order, relatively speaking—a finding contrary to much recent conventional wisdom.

Deutsche Börse launches notification feed to alert users of upcoming economic releases
Deutsche Börse – Market Data + Services today announced the launch of AlphaFlash Risk Signal, a notification system that informs users of upcoming economic releases and then alerts them the moment the economic indicator is released.

Ratings Agencies Told Investors What They Wanted to Hear
Matt Levine – Bloomberg View
A popular narrative of the ratings agencies’ role in the financial crisis goes something like: banks paid ratings agencies a lot of money to rate mortgage-backed securities; so the ratings agencies gave a lot of those securities undeserved AAA ratings; so a lot of investors were deceived into thinking those securities were safe; so the investors bought a lot of those securities and eventually blew up.

Russia Axes Sixth Bond Sale After Crimea Drives Yield to Record
Vladimir Kuznetsov – Bloomberg
Russia canceled its sixth ruble bond auction this year after borrowing costs rose to a record as President Vladimir Putin backed annexing the Crimean peninsula and western nations threatened tougher sanctions.

**JK – How low can the Ruble go? Second worst performer against the dollar this year.

ECB watchdog tells Europe to prepare to shut “zombie” banks
John O’Donnell – Reuters
Euro zone countries must prepare to shut their failing “zombie” banks and quickly pool the money to do it, the bloc’s top regulator said on Tuesday, ahead of a warts-and-all investigation of its still-fragile financial system.

**JK – What is the best way to kill a zombie bank?

Bank of England Shakes Up Top Team
The U.K. treasury on Tuesday made three appointments to the Bank of England’s top team and shuffled seats on its two policy committees as part of an unprecedented overhaul of the 320-year-old central bank to be unveiled later by Gov. Mark Carney.

**JK – Shaken, not STIRed.

China and Its Currency Grow Up
Jim O’Neill – Bloomberg View
China’s central bank has announced a widening of the trading band of the renminbi from a daily maximum of 1 percent to 2 percent. The move follows a recent increase in the currency’s volatility, and the apparent end of its long, slow rise against the dollar. What does the new policy mean?

El-Erian starts tweeting, but won’t talk about Gross
Mohamed El-Erian, the former chief executive of Pimco, has taken to Twitter to express his views to the world, but he said on Monday he wants to steer clear of the drama surrounding his falling out with co-founder Bill Gross for now.

Central Banks

Fed Seen Adopting Qualitative Rate Guidance as Job Market Gains
Jeff Kearns and Catarina Saraiva – Bloomberg
The Federal Reserve will probably discard its 6.5 percent jobless rate threshold while adopting qualitative guidance for signaling when it will consider raising the benchmark interest rate, economists said in a survey.

Deutsche Bank Sees The Fed Focusing On Five Labor Market Indicators
Michael Aneiro – Barron’s
The Federal Reserve is set to kick off its first two-day policy committee meeting under the leadership of Janet Yellen tomorrow. Markets expect the Fed to use the occasion to update its stale thresholds for inflation and employment (particularly the 6.5% unemployment rate threshold) that have stood for months as the only hints it’s given about when it plans to raise short-term interest rates.

China’s central bank holds bailout talks with property developer
Jamil Anderlini in Beijing –
China’s central bank and one of its largest state lenders are holding emergency talks over whether to bail out a defaulting real estate developer.

Investor risk profile edges away from Fed policy
Jamie Chisholm –
Janet Yellen on Wednesday delivers her first policy decision as chairwoman of the Federal Reserve. The market fully expects quantitative easing to be cut by another $10bn to $55bn a month.


China’s Yuan to Start Direct Trading With Kiwi From Tomorrow
Fion Li – Bloomberg
China will start direct trading between the yuan and New Zealand’s dollar from tomorrow as the world’s second-largest economy promotes usage of its currency in global trade and finance.

**JK – A critical currency pair.

Treasury’s Cohen Says Regulation Helps Virtual Currencies
Carter Dougherty and Greg Farrell – Bloomberg
Virtual currencies will benefit from government oversight that lends credibility to the market, according to the U.S. Treasury Department’s top official targeting money laundering.

Renminbi edging closer to 6.20 ‘red line’
Josh Noble and Patrick McGee in Hong Kong –
The renminbi has continued to edge closer to levels analysts warn could have “major repercussions” for the market, as the Chinese currency extended its month-long slide.

China’s Temporary QR Code Ban Could Have Implications for Bitcoin’s Future
The People’s Bank of China (PBOC) has placed a temporary ban on payments made by scanning quick-response (QR) codes with mobile devices.

First Derivatives In Partnership With Tullett Prebon’s Chapdelaine FX
Alliance News
Trading and risk management software company First Derivatives PLC Monday said it has entered a partnership with Tullett Prebon PLC for Tullett’s foreign exchange platform Chapdelaine FX.

Indexes & Index Products

U.S. Consumer Prices Tick Up 0.1% In February, In Line With Estimates
With an increase in food prices offsetting a drop in energy prices, the Labor Department released a report on Tuesday showing a modest increase in U.S. consumer prices in the month of February.
The Labor Department said its consumer price index edged up by 0.1 percent in February, matching the increase seen in January. The uptick in prices also matched economist estimates.

European shares fall back as Ukraine keeps investors on edge
Blaise Robinson – Reuters
European stocks dipped on Tuesday, trimming the previous session’s gains as tensions in Ukraine following the weekend referendum in Crimea kept investors on edge.
Germany’s DAX index – seen as the most vulnerable to the crisis between Russia and the West over the future of Crimea – underperformed again, and was down 0.5 percent, with Siemens falling 1 percent and Henkel down 0.8 percent.

Euronext and CF&B Communication launch 2nd European ETF Event


Gold Falls Most in Six Weeks as Putin Comments Sap Haven Demand
Debarati Roy and Nicholas Larkin – Bloomberg
Gold slumped the most in six weeks as signs of easing tensions in Ukraine diminished demand for haven assets and sparked a rally in equities.
Russian President Vladimir Putin said he isn’t seeking to split up Ukraine. Concern that a dispute over Crimea would further escalate pushed gold futures to a six-month high yesterday. Data today showing muted U.S. inflation and a stabilizing housing market fueled speculation that the Federal Reserve will further pare monetary stimulus this week.

***JB: I am surprised people take Putin at his word on this stuff. He has been anything but forthright as regards Crimea and Ukraine so far.

Gold falls over 1% as Fed meeting promises volatility
Myra P. Saefong and Ben Eisen – MarketWatch
Gold prices added to this week’s decline on Tuesday, pulling back by more than 1% with a potentially volatile stretch of trading ahead of a key Federal Reserve meeting.


Germany Role in Europe Stability Mechanism Upheld
Karin Matussek – Bloomberg
Germany’s top court rejected lawsuits seeking to block the country’s participation in the European Stability Mechanism, a key part of the euro area’s response to the debt crisis.

GE’s credit card business faces two federal investigations
Federal regulators are conducting two investigations into General Electric Co’s credit card business for potential violations of consumer finance laws, according to a regulatory filing related to the unit’s planned initial public offering.

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