First Impressions

Gail Osten: Remembrances
In Friday’s newsletter we reported the passing of CBOE communications director and 40-year industry veteran Gail Osten. Since then we have received countless notes of remembrance from readers – colleagues and former colleagues, journalists and more. We are collecting these comments and remembrances and publishing them on JohnLothianNews.com HERE

If you would like to contribute, please send to jimkharouf@johnlothian.com

If you missed Friday’s obituary by Jim Kharouf, here it is again:

Think Positive: Gail Osten Leaves Fond Memories
Jim Kharouf – JLN
There are some people who just get it.
Gail Osten was one of those people who just got it. Got what? You name it, work, personal issues, a joke – life. As a professional, her career spanned more than four decades starting in marketing at the MidAmerica Commodity Exchange and ending as director of corporate communications at the Chicago Board Options Exchange. She was also a mother of two boys, Dan and Jon, and wife to Joe Osten, all of whom she spoke about regularly.
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** A celebration of Gail Osten’s life will be held on March 29th, from noon to 5 p.m. at The Snuggery, 122 S. York Road, in Elmhurst, IL. Friends and colleagues are welcome.

Quote of the Day

“It’s bit rich when you look at our exposure to Greece. What sort of blackmail is this? We haven’t created any rule for Greece, rules were in place and they’ve been applied.”

Mario Draghi in the story, “Draghi Rejects Accusation That ECB Is Blackmailing Greece”.

Lead Stories

Young Financier’s Insurance Empire Collapses; Investments of insurance companies owned by Southport Lane Management were swapped for unusual and sometimes worthless assets
By Mark Maremont and Leslie Scism, WSJ
Alexander Chatfield Burns cut a dashing figure in young New York financial circles.
Still in his mid-20s, he controlled a private-equity firm that owned several insurance companies. He called late-night meetings at a penthouse cigar club and donated the wine for a Guggenheim museum event from a vineyard he later bought. Then one day about a year ago, Mr. Burns checked into a mental-health ward at New York’s Bellevue Hospital, leaving behind an affidavit describing an unusual series of asset transfers. Soon after, he resigned from his company, Southport Lane Management LLC.
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China Forgoes Veto Power at New Bank to Win Key European Nations’ Support
WSJ
China offered to forgo veto power at a new Beijing-led development bank in a proposal that helped attract major European countries despite U.S. concerns.
Chinese negotiators presented the no-veto position to some of the U.S.’s staunchest allies in Europe in the past few weeks, according to officials from China and Europe involved in negotiations to set up the bank.
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No Risk Too Big as Bond Traders Plot Escape From Negative Yields
by Anchalee Worrachate, Bloomberg
In the negative-yield vortex that is the European bond market, investors are discovering just what lengths they’re willing to go to generate returns.
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Global fund managers warn of a bond bubble
David Oakley, FT
A growing number of professional investors are warning that bonds are overvalued as fears grow that a fixed income bubble will collapse in a disorderly sell-off.
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These Junk Bond Outflows Show Just How Jumpy Buyers Have Become
Bloomberg
The promise of low borrowing costs for longer just doesn’t pack the punch it used to.
Last week should have been fantastic for the $1.3 trillion U.S. junk-bond market: the Federal Reserve scaled back its prediction for how quickly it will raise benchmark interest rates while also expressing confidence in the world’s biggest economy. That’s almost an ideal world for junk bonds.
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Carlyle CEO says strong U.S. dollar won’t deter long term investors
Reuters
The strong U.S. dollar may temporarily deter some companies from investing in the United States, but the country will continue to attract foreign investment, the Carlyle Group (CG.O) co-chief executive David Rubenstein said on Monday.
“The currency has slowed it down a little bit but it’s just slowing it down,” he told a panel discussion at the SelectUSA summit.
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CME Is Said to Mull Rule Change as Basel Pressure Hampers Banks
by Matthew Leising, Silla Brush, Bloomberg
New rules meant to make banks safer are prompting the world’s largest derivatives exchange to consider changing how it backs trades in one of the biggest shifts since futures were created in 1865.
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Volcker Outlines Plan for Overhauling Financial Regulation
By Ryan Tracy, WSJ
Former Federal Reserve Chairman Paul Volcker outlined a new plan for revamping the way the U.S. government oversees the financial system, adding his voice to an idea that is broadly supported – even if Congress can never muster enough votes to pass it.
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For Clintons, a Hedge Fund in the Family
By MATTHEW GOLDSTEIN and STEVE EDER, NY Times
Since marrying Chelsea Clinton five years ago, Marc Mezvinsky, a money manager, appears to have settled into his life as Bill and Hillary Clinton’s son-in-law. He has regularly appeared at charitable events, once introducing the former president at the Clinton Foundation’s celebrity poker tournament by dryly saying, “You may have heard of my father-in-law.” And at the recent N.B.A. All-Star Game, Mr. Mezvinsky took a seat next to Mr. Clinton and his partner in charitable endeavors, Dikembe Mutombo, the former basketball star.
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Euro money funds turn red
Steve Johnson, FT
Yields on virtually all euro-denominated money market funds aimed at institutional investors are likely to turn negative in the next two weeks, according to the industry’s trade body.
The yields on funds that specialise in holding eurozone government debt have already turned negative as returns on sovereign debt issued by countries such as Germany, France, Finland, the Netherlands and Ireland have fallen below zero.
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Central Banks

ECB Stimulus Pushes Bond Investors to Riskier End of Yield Curve
WSJ
Bond investors are going long. The question is whether they will regret it.
The European Central Bank’s colossal dose of monetary stimulus has crushed the returns available on bonds, encouraging investors to buy longer-term debt that offers higher rewards.
But that strategy comes with a risk: The longer the life of a bond, the higher its sensitivity to changes in interest rates. For debt that isn’t due for decades, even a small rise in interest rate expectations can dramatically erode its value.
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ECB to Continue Buying Debt Until Inflation Stabilizes
WSJ
The European Central Bank will purchase large amounts of public and private debt for at least 18 months and until it is convinced that inflation will stabilize near annual rates of 2%, the bank’s president Mario Draghi said on Monday, underscoring the ECB’s willingness to flood the eurozone with freshly minted money far into the future.
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Draghi Rejects Accusation That ECB Is Blackmailing Greece
Bloomberg
Mario Draghi pushed back against an accusation that the European Central Bank is blackmailing Greece and compounding the pressure on the country.
“Let me disagree with you about everything you said,” Draghi told Portuguese lawmaker Marisa Matias during his regular hearing at the European Parliament in Brussels. He was responding to a question about the withdrawal of a waiver that allowed the ECB to accept the country’s junk-rated debt as collateral.
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The Fed May Be Overreacting to the Dollar’s Strength
Bloomberg
The rising U.S. dollar has economists everywhere analyzing what the effects to U.S. growth will be, and those at the Federal Reserve are no exception.
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Fed expected to hike this year, but future path uncertain: Fischer
Reuters
The Federal Reserve is “widely expected” to begin raising interest rates this year though the policy path remains uncertain, the central bank’s second-in-command said on Monday, appearing to lay the groundwork for a less predictable future.
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Fed’s Mester urges shift in forward guidance role
Reuters
The forward guidance issued by the Federal Reserve should gradually evolve back to its “normal” role of communicating the thinking behind policy moves, Cleveland Fed President Loretta Mester told a bankers’ conference in Paris on Monday.
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Currencies

Currency wars rebound on the Fed
Gavyn Davies, FT
When the Brazilian finance minister Guido Mantega complained that the Federal Reserve was waging a currency war against his country in September 2010, his comments led to a wave of sympathy and concern. The Fed’s aggressive monetary easing was causing a capital flight from the US into the apparently unstoppable emerging markets.
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LCH reshuffles ahead of FX options clearing
Futures & Options World
LCH.Clearnet has appointed heads of its foreign exchange and credit derivatives units as the European clearing house gears up to launch later this year foreign exchange options clearing. LCH said Gavin Wells, the global head of LCH’s ForexClear and CDSClear businesses, will focus exclusively on ForexClear from July and Frank Soussan will be promoted to global head of CDSClear.
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Australian Regulator Tracing Currency Trades Before RBA Decision
by Adam Haigh, Michael Heath, Bloomberg
Australia’s securities regulator is tracking transactions that caused a sudden jump in the local currency ahead of the Reserve Bank of Australia’s interest-rate decision and is looking at potential sources for any leak of the information as part of its investigation.
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Nasdaq to Provide Trading Technology for Bitcoin Marketplace
WSJ
Nasdaq OMX Group Inc. has agreed to provide New York-based startup Noble Markets with core technology to power a new marketplace aimed at allowing companies and institutional investors such as hedge funds to trade bitcoin and related digital-currency assets.
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Indexes & Index Products

S&P 500 2014 Buybacks Post 16.3% Increase
CNBC
S&P Dow Jones Indices announced today that preliminary results show that S&P 500® fourth quarter 2014 stock buybacks, or share repurchases, decreased 8.7% to $132.6 billion down from the $145.2 billion spent on share repurchases during the third quarter of this year. Historical S&P 500 buyback data can be found at: www.spdji.com/indices/equity/sp-500.
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Small-Cap Indexing: Popularity Can Be A Pain
Seeking Alpha
The Russell 2000 Index is the most popular benchmark for active small-cap managers to measure themselves against. But here is an industry secret: Active managers pick that index because it is easy to beat. If you’re going with a passive strategy, you don’t have to limit yourself to that index.
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Leadership Change: MidCap & Small Cap U.S. Stocks Lead Large Caps in 2015 YTD, According to Russell Indexes
MarketWired
After U.S. large- and midcap stocks led other major U.S. equity cap tiers in 2014 with matching 13.2% returns as measured by the Russell Top 200 and Russell Midcap Index, respectively, midcaps have pulled away from large caps in 2015 with a 3.6% return year-to-date as of March 16th as measured by the Russell Midcap Index. U.S. small cap stocks, as reflected by the Russell 2000 Index, have also been strong in 2015, up 3.4% year-to-date as of March 17. U.S. large cap stocks as measured by the Russell Top 200 Index, which consists of the 200 largest U.S. stocks by market capitalization, have lagged relative to small and mid-caps thus far in 2015 with a 1% return.
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‘Just Index’ sets sights on market solution to inequality
FT.com
One easy macro forecast, says hedge fund titan Paul Tudor Jones, is that income inequality will not stay as high as it is today. “The gap between the wealthiest and the poorest will get closed,” he told the TED conference last week. “History always does it?.?.?.?either through revolution, higher taxes or wars – and none of those is on my bucket list.”
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Gold

ICE Benchmark Administration Launches LBMA Gold Price; Transitions Gold Price to Transparent, Electronic Auction Process
ICE
Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses, today announced that ICE Benchmark Administration (IBA) successfully launched the LBMA Gold Price on Friday March 20, 2015, replacing the London Gold Fix established in 1919. IBA has transitioned the gold price to a new, independently administered, transparent and electronic auction process.
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Goldman, UBS join ex-“fixing” banks for new LBMA gold price
By Jan Harvey, Reuters
LBMA benchmark replaces the London gold fix
ICE Benchmark Administration operating new process (Adds background, comment)
The new London Bullion Market Association (LBMA) Gold Price went live for the first time on Friday, with Goldman Sachs and UBS joining the four members of the now defunct gold “fix” in setting its electronic replacement.
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Gold in faeces ‘is worth millions and could save the environment’
The Guardian
Fortunes could be saved from going down the drain by extracting gold and precious metals from human excrement, scientists suggest.
Sewage sludge contains traces of gold, silver and platinum at levels that would be seen as commercially viable by traditional prospectors. “The gold we found was at the level of a minimal mineral deposit,” said Kathleen Smith, of the US Geological Survey.
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Ivory Coast to clamp down on illegal gold mining
Reuters
Ivory Coast launched an operation on Monday to shut down hundreds of illegal gold mining sites blamed for violence, unregulated immigration and environmental destruction, the defence and mining ministers said.
The West African nation is recovering from a decade-long political crisis that ended in a brief 2011 civil war, and the government is now seeking to develop the mining sector as part of efforts to diversify the economy.
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