| | | | | | | | April 05, 2016 | | | | | First Impressions | | |
2016 Exchange CEO Series: SGX's Boon Chye Expanding With New Products, New Platform in 2016
JohnLothianNews.com
Loh Boon Chye took over the Singapore Exchange CEO post in July 2015 with a focus on growing the overall business in derivatives, clearing and equities. But he faces headwinds across the asset classes as China's economy slows. Boon Chye, however, believes the exchange is well positioned to move forward in 2016.
SGX has made a name for itself by introducing equity index futures with the Nikkei 225 futures, among others. The exchange now is broadening its China product suite with the introduction of a series of equity derivatives based on MSCI indexes including the MSCI China Free Index. The new product follows the FTSE China A50 futures contract, which ranked 18th among global futures exchange in 2015, and traded 95.8 million contracts last year, up 131 percent from 41.3 million contracts a year earlier, according to the Futures Industry Association annual survey.
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| | | | | | Quote of the day: | | | | | | “ | "Panama has an extremely aggressive and obstructive attitude. Dialogue has broken down. It is the last financial centre that has refused to implement global standards of fiscal transparency. There has been very strong pressure from the law firms on the Panamanian government."
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| ” | Pascal Saint-Amans, the Organization for Economic Cooperation and Development's tax chief, in the story, "Panama bombshell spells demise of shadow finance, and privacy"
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| | | | Lead Stories | | |
Panama bombshell spells demise of shadow finance, and privacy
Ambrose Evans-Pritchard - The Telegraph
The secret world of offshore banks and money-laundering has been under the microscope ever since the financial crisis. Now it is the turn of lawyers, registrars, and the hidden network of facilitators. The treasure trove of 11.5m documents leaked - or more precisely stolen - from the Panama law firm Mossack Fonseca lifts the lid on the extraordinary practices of the global elites, and on the alleged services of off-shore legal cabinets for terrorist organisations, drug cartels, sanctions busting, and front companies of all kinds.
jlne.ws/1UGIv60
****SD: Also see Bloomberg's Banks Have a Panama Problem, Panama Data Leak Shines Uncomfortable Spotlight on Wealth of the Global Elite and the ICIJ's Global Banks Team with Law Firms To Help the Wealthy Hide Assets
Basel Warns Against `Myopic' Calls to Ease Bank Capital Demands
John Glover - Bloomberg
Global regulators on the Basel Committee on Banking Supervision are pushing back against calls for them to ease capital requirements on lenders to stimulate lending. The job of the committee, which brings together regulators from Australia and China to Italy and the U.S., is to define minimum standards rather than to set out the "optimal level" of capital, Secretary General William Coen said in the text of a speech to be delivered Tuesday in Sydney. That approach doesn't preclude individual jurisdictions from making tougher demands, if that is what they wish to do, he said.
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Libor trial: Former Barclays traders 'driven by money'
The Telegraph
Five former Barclays bankers rigged key interest rate benchmark Libor "for their own advantage" in a conspiracy "driven by money", a court has heard. Libor submitter Jonathan Mathew, 35, and swaps traders Stylianos Contogoulas, 44, Jay Merchant, 45, Alex Pabon, 37, and Ryan Reich, 34, are accused of conspiracy to defraud from June 2005 to September 2007. All five have pleaded not guilty.
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'Transformational Options' Needed to Limit Bank Risk, Kashkari Tells Town Hall
Shayndi Raice - WSJ
Federal Reserve Bank of Minneapolis President Neel Kashkari opened up a public town hall meeting here Monday by telling his audience that he is "the guy who bailed out the banks." Mr. Kashkari, who when he worked at the Treasury Department ran the Troubled Asset Relief Program, or TARP, in response to the financial crisis that began in 2007, invited locals in his district to come hear about his efforts to examine whether the country's largest banks remain so big that they pose a systemic threat to the economy. He held the public forum after a daylong symposium exploring whether to break up the big banks, limit their size or regulate them like public utilities.
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****SD: Also see Regulators seen as exhausted in effort to end too-big-to-fail banks
Goldman Profit Estimates Cut Again as Analysts Project 45% Drop
Dakin Campbell - Bloomberg
Three months after predicting Goldman Sachs Group Inc. would put the tumultuous end of 2015 behind it and stabilize profits, analysts are reversing course and cutting projections. Again. Twenty-two analysts have lopped 94 cents off the average estimate for Goldman Sachs's adjusted earnings per share over the past four weeks -- the fourth straight quarter they've cut figures in the final days, according to data compiled by Bloomberg.
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****SD: For more of the big name doldrums, see: Barclays Warns of Weaker First Quarter in Investment Banking Arm, Senior traders are swapping out of Deutsche's rates business and Credit Suisse CEO Says Risk `Well Managed' After $1 Billion Loss
Mortgage-backed securities make £6.2bn comeback
Thomas Hale - Financial Times
Cerberus Capital Management has launched what is set to be Europe's biggest mortgage-backed deal since the financial crisis, attracting strong investor demand for an asset class that has struggled over recent years. The £6.2bn of securitisation bonds are backed by more than 80,000 pre-crisis loans made by Northern Rock, the failed UK bank. The loans were bought by Cerberus from the UK Treasury late last year in what was the largest financial asset sale by a government in Europe.
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Banks Bracing for Debt-Equity Swaps Revival
Caixin
The Chinese government wants to revive debt-for-equity swaps and disperse trillions of yuan in toxic loans before they choke the nation's banks. A yet-to-be-finalized swaps program outlined March 25 by top officials in Beijing could mirror a successful 1999-2004 project through which banks took stakes in 580 companies in exchange for canceling 405 billion yuan worth of overdue loans.
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Greece remains a slow-motion car-crash
Matthew Lynn - The Telegraph
Leaked documents on the web. Threats to provoke a financial collapse. Spies within the government. It might sound like an early draft of the sequel to the The Night Manager. But in fact, it is just the latest episode in a drama that has been running a lot longer than that, and has had even more unlikely twists and turns - the Greek crisis. In truth, a "credit event" is precisely what the Greek crisis needs Over the weekend, the International Monetary Fund found itself in hot water over the transcript of a conversation between its senior officials posted on WikiLeaks. They openly discussed provoking a "credit event" for the beleaguered country, taking the Greek back to the edge of bankruptcy, as a way of forcing the Germans to concede debt relief.
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Global funds drawn to India's record $120 bln sour debt
Reuters
Global distressed asset buyers such as J.C. Flowers & Co and Apollo Global are flocking to India, where banks have been ordered to clean up an estimated $120 billion of bad and troubled loans. Bad loans at Indian banks jumped by nearly a third to around 4 trillion rupees ($60.3 billion) late last year as the central bank drives a national clean-up of banks' balance sheets. That figure doubles to a record amount when restructured, or rolled over, loans are included - amounting to 11.3 percent of all loans, the government says.
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Pimco says had 'good cause' to fire Bill Gross: filing
Reuters
Pacific Investment Management Co said former bond manager Bill Gross' abusive conduct and effort to sabotage colleagues he deemed disloyal gave it "good cause" to oust him, and not pay any of the more than $200 million of damages he now seeks in a lawsuit.
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****SD: Also, Pimco: Bill Gross Left Resignation Letter 'in the Middle of the Night' and Pimco Says Bill Gross Was Told He'd Lose $200 Million Bonus
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| Central Banks | The Federal Reserve is Back in the Drivers Seat
Ben Eisen - WSJ
As stocks sold off and volatility surged earlier this year, the talk of the markets was whether the Federal Reserve had lost control of the markets. Those concerns are going away quickly. For the latest evidence, look to Societe Generale analysts, led by Alain Bokobza, who pointed out Tuesday that a correlation between a stock gauge and a market measure of Fed policy recently turned positive.
jlne.ws/1qo9U0l
The ECB Explains Why Central Banks Can't Go Bankrupt in a Footnote
Lorcan Roche Kelly - Bloomberg
This morning the European Central Bank published a research paper titled "Profit distribution and loss coverage rules for central banks." The paper dryly outlines how central banks account for profits and losses, and how those profits and losses are distributed to the shareholders of those central banksÂusually the state in which they are based.
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Unconventional monetary policy injected with steroids
Nouriel Roubini - Australian Financial Review
With most advanced economies experiencing anaemic recoveries from the 2008 financial crisis, their central banks have been forced to move from conventional monetary policy - reducing policy rates via open-market purchases of short-term government bonds - to a range of unconventional policies. Although the zero nominal bound on interest rates - previously only a theoretical possibility - had been reached and zero-interest-rate policy (ZIRP) had been implemented, growth remained anaemic. So central banks embraced measures that didn't even exist in their policy toolkit a decade ago. And now they are poised to do so again.
jlne.ws/1qsWQGG
IMF director urges governments to 'pick up the growth baton'
Katie Allen - The Guardian
Governments must urgently pursue more growth-friendly policies to shore up a weakening global economy beset with risks, the head of the International Monetary Fund has said. Christine Lagarde also put governments on alert that they should prepare contingency plans in case threats to the fragile global economy materialise.
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Insurance: The Next Global Financial Danger
Moritz Koch and Frank Wiebe - Handelsblatt
The International Monetary Fund is warning that insurance companies could be the next big dangers for the global financial system. It's a risk that Germany has already long been familiar with.
/goo.gl/7DYRcp
Fourteen asset managers sue Portuguese central bank
Thomas Hale and Martin Arnold - Financial Times
Some of the world's biggest asset managers have taken legal action against the Portuguese central bank, seeking to recoup investments in Novo Banco which were written down at the end of last year. BlackRock, Pimco and 12 other institutional investors have hired UK "magic circle" law firm Clifford Chance to launch a suit accusing the central bank of violating key principles and demanding that their holdings are restored.
jlne.ws/1UGMnE1
India's Central Bank Cuts Interest Rates
Gabriele Parussini - WSJ
India's central bank cut its interest rates to the lowest level in five years and announced steps to increase liquidity in the country's banking system, as it took stock of slowing inflation in Asia's third-largest economy.
jlne.ws/1qsWu2H
India c.bank says to unveil futures contract for short-term rates
Reuters
The Reserve Bank of India said on Tuesday it could unveil by the end of September details of a new futures contract, likely to be tied to the overnight call rate or other short-term interest rates that closely track the country's main repo lending gauge.
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| | | | Currencies | Currency wars backfire for Japan and Europe
John Plender - Financial Times
Looking back on three months' worth of extreme market volatility it is clear that global currency wars have entered a new and more complicated phase. In effect, volatility has neutered the power of those central banks that have been most committed to weakening their currencies. The Bank of Japan provides the most notable example of impotence. It is quite a paradox that a country with Japan's level of public sector debt can turn into a haven in a global market storm, but that was the case in the first quarter of 2016.
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Playing SAFE: Why Chinese forex regulator buying up stocks is raising eyebrows
Xie Yu - South China Morning Post
China's foreign exchange regulator, the State Administration of Foreign Exchange (SAFE), has become the latest member of the 'national team' tasked with propping up the stock market, raising questions about both its suitability for the job as well as the efficacy of a programme that has failed to animate the market despite splashing out billions of yuan.
jlne.ws/1UGHA5A
Australia's central bank warns on rising currency
MarketWatch
Australia's central bank warned that a rising currency could interfere with a transition to a broader based economy Tuesday, fueling expectations of interest rate cuts to come later in the year after the bank kept its powder dry at its latest policy meeting.
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Nigeria's determination to avoid currency devaluation is worsening its latest fuel crisis
Quartz
The last 18 months have been damaging for Nigeria's economy. Already battered by a drop in the price of oilÂits main export and source of earningsÂthe country has also seen its currency, the naira, lose almost half of its value against the dollar. Nigeria's foreign cash reserves sharply declined as the countryÂlargely dependent on imports from refined petroleum to toothpicksÂwas spending quicker than it was earning.
jlne.ws/1ozptQV
Sterling skids to one-and-a-half-year low against euro
Reuters
Sterling skidded to its weakest against the euro since September 2014 on Tuesday, while the cost of hedging against volatility against the dollar over the next three months hit a six-year high on worries Britain could vote to leave the EU in June.
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| | | | Indexes & Index Products | It Was a Stock Picker's Market In the First Quarter. Too Bad About the Stock Picks
Oliver Renick - Bloomberg
It was a stock picker's market in the first quarter. Too bad about the stock picks. By some measures, active managers got what they've been hoping for in 2016, at least on paper: correlated moves among equities unwound to the lowest levels since 2012 and breadth, or the number of stock advancing, came roaring back. Both are viewed favorably by anyone trying to beat an index.
jlne.ws/1UGJpzl
Investors rake over ashes of a dismal quarter
John Authers - Financial Times
The W-shaped markets since last August have confused many, and created opportunities. They have made money for some but not, on the whole, for long-suffering investors with their money in active equity funds. The latest numbers from BofA Merrill Lynch's quantitative team, led by Savita Subramanian, suggest that the first quarter of this year was the worst since the bank's records began in 1998, when judging US equity funds against their benchmarks. In none of all the many market breaks and crises in the 18 years since then have they so comprehensively failed to take advantage of the opportunities the market offered them.
jlne.ws/1Syu26c
Goldman's Kostin Sees Buyback Break Threatening Stock Rally
Oliver Renick - Bloomberg
The rapid recovery in the U.S. stock market is more likely to falter before it gets a second wind, according to Goldman Sachs Group Inc.'s David Kostin. That's because a 13 percent rally fueled by firming economic data and a dovish Federal Reserve may not be enough to withstand a third straight quarter of declining corporate profits and a stretch where the market loses its main source of demand -- corporate buybacks. For Kostin, chief U.S. equity strategist at the firm, that means the S&P 500 is likely to pull back in the short-term and rise just 1.6 percent over the final nine months of the year.
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Can Beta be Smart?
ETF Trends
Factors, multi-factors, smart beta, strategic beta, and whatever else you want to call non-market-cap-weighted investing is everywhere. I don't think it is plausible to go one week without hearing mention of smart beta if you work anywhere near ETFs. As the ETF industry (and even some mutual funds and stock pickers) expands the menu of smart beta options, some users of traditional market cap products may feel ostracized by the smart beta movement. It is important to remember ETFs are tools to express views; understanding their risk and return as a result of their weighting methodology is paramount.
jlne.ws/1SyxLRe
Globe's Dullest Sector is Effortlessly Beating the S&P 500
ETF Guide
The ho-hum utilities sector is the antithesis of popular stocks like Netflix (NasdaqGS:NFLX) and Tesla (NasdaqGS:TSLA). It's a hyper un-sexy industry sector that's been long associated with widows and orphans, rather than hotshot entrepreneurs who like to build rocket ships in the office parking lot. And guess what? The widows and orphans are beating the hotshots! Moreover, the widows and orphans are also beating the pants off the broader S&P 500 index (NYSEARCA:SPY) year-to-date.
jlne.ws/1SyxFc9
| | | | Gold | Osama bin Laden Was Bullish on Gold
Matthew Rosenberg - NY Times
Osama bin Laden, gold bug? It appears so. At the end of 2010, Al Qaeda found itself suddenly flush after securing a $5 million ransom, and the group had to decide what to do with its windfall. At a time when the financial uncertainty of the Great Recession made gold a hot investment, Bin Laden turns out to have been as bullish about the precious metal as any Ron Paul devotee, Tea Party patriot or Wall Street financier. In a letter he wrote in December 2010, Bin Laden instructed Al Qaeda's general manager to set aside a third of the ransom  nearly $1.7 million  to buy gold bars and coins.
jlne.ws/1qsWLTi
Portfolio Diversification: How Gold Can Help Reduce Risk
Ticker Tape
>From jewelry to gold mining stocks and even futures, the yellow metal commands a special allure in the world of investment. Today, jewelry, investment, and central bank purchases comprise the three major demand drivers for the precious metal. Beyond that, it turns out, holding between 2% to 10% of your portfolio in gold over the long run may improve its performance, according to research from the World Gold Council. "One of the most important attributes that gold has is that it helps investors manage risk more effectively," says Juan Carlos Artigas, director for investment research at the World Gold Council.
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Clashing Views on Gold
John Kimelman - Barron's
In the first quarter, gold registered its strongest quarterly gain in 30 years. But what lies ahead for the metal? Depends, of course, on whom you ask and which macroeconomic indicators and other evidence they choose to accentuate. A piece by Bloomberg argues that gold, which jumped 17% in value last quarter, could add more nice gains ahead, thanks in part to the bullishness of hedge-fund managers.
jlne.ws/1SyxjCn
| | | | Miscellaneous | Banks sublet office space after staff cuts
Emma Dunkley and Judith Evans - Financial Times
Thousands of job cuts and a drive to slash costs are prompting a number of the largest global banks based in the UK to sublet office space, close branches and sell off real estate. In the past few weeks it has emerged that a number of banking groups are developing plans to sublet thousands of square feet in Canary Wharf office space as jobs are axed or moved to cheaper locations.
jlne.ws/1qsVZG1
Fund using freelance programmers beats US stock market
Robin Wigglesworth - Financial Times
A "crowdsourced" hedge fund that uses the trading algorithms of a handful of freelance programmers notched up a 1.93 per cent gain net of its theoretical fees in its first full quarter of trading  beating the US stock market. Boston-based Quantopian runs a platform for programmers, mathematicians and data scientists that allows them to design and test stock trading algorithms, offering a $100,000 trading kitty to the best-performing strategy every month, with the winner keeping any profit they make over the next six months.
jlne.ws/1SyCOB6
How Can a Jobs Recovery So Historic Be So Disappointing?
Derek Thompson - The Atlantic
These might be the two most important questions about the U.S. economy: Are more people working? And are they making more money? There are some common and well-understood answers to those questions. First, one could easily argue that the U.S. is in the midst of a historic job recovery. With the most consecutive months of private-sector job growth in history, this is, to honor the beginning of baseball season, truly a DiMaggio Economy. Even better, the job growth in the last three months has, by one measure, been the strongest of any quarter-year since 1983. The entire recovery has been in full-time work. Surely, the economy is working its way back to normal.
jlne.ws/1qsVOKA
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