 | | | | | | | | March 30, 2016 | | | | | First Impressions | | | 
2016 Exchange CEO Series: Jeff Sprecher Talks Data, Clearing and Growth for ICE
JohnLothianNews.com
For the Intercontinental Exchange (ICE), 2015 was about major investments in data and analytics services. Now in 2016, the exchange is looking to integrate recent data acquisitions into its business and grow well beyond traditional exchange trading and clearing services.
ICE CEO Jeff Sprecher spoke with John Lothian News at the FIA Boca Conference about how its purchases of SuperDerivatives, Interactive Data and S&P Analytics fit into its business model. ICE is also working with Blackrock, on exchange traded funds, to become its benchmark index provider.
"We started to pivot the company to get deeper into the data space," Sprecher said. "We want to articulate a vision on how exchanges and data can come together into one holistic business that can serve customers."
| | | | | | Quote of the day: | | | | | | “ | "Whenever a central banker is uncertain, rest assured that the only certainty is that he or she does nothing."
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| ” | David Rosenberg, chief economist and strategist at Gluskin Sheff, in the story, "Why the Fed rate talk was 'a bunch of nonsense'"
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| | | | Lead Stories | | |
Investment banks face sharp trading falls in tough climate
Financial Times
Global investment banks suffered declines of as much as 56 per cent in their trading businesses in the first three months of the year, analysts believe, stoking fears of further lay-offs for staff and lower dividends for shareholders. Europe's shrinking investment banks bore the full brunt of 2016's difficult environment for the buying and selling of assets such as bonds, stocks and commodities on behalf of clients. Their woes were highlighted by Credit Suisse's admission last week that its trading revenue fell by 40-45 per cent in the period.
goo.gl/WTsL3X
Healthy Job Market at Odds With Global Gloom
Wall Street Journal
Gloom hangs over the global economy. The International Monetary Fund is preparing to downgrade projected growthÂagain. The "fragile" recovery requires "urgent action," Christine Lagarde, the IMF's chief, warned recently. Central banks are studying what exotic tools they have left to avert recession. Leaders of the top 20 economies recently pledged in Shanghai to deploy "all policy toolsÂmonetary, fiscal and structural." Yet look at the most important barometer of economic health, and the hand-wringing seems out of place. In most big economies, the unemployment rate is dropping, and in many, is back to pre-recession levels, the sort of performance that would normally merit high-fives. Yet neither the G-20 nor Ms. Lagarde pointed this out.
goo.gl/pIvAWM
Pay for Cash? No Way
Bloomberg Gadfly
As emerging market central banks sell U.S. Treasuries to defend their currencies, hedge funds have surfaced as big buyers of the ultra-safe securities. While speculation about what's driving that abounds, the reason may be as simple as investment managers not wanting to pay someone else money for holding cash.
goo.gl/kEEHQA
Growth of fintech forecast to spur almost 2m banking job cuts
Financial Times
European and US banks will cut another 1.7m jobs in the next decade as financial technology companies stalk profitable growth areas such as lending and payments, a new report by Citigroup has predicted. The 108-page Citi note takes a forensic look at where "fintech" companies are deploying their resources, how much business they have already won and the consequences for the traditional banking industry.
goo.gl/ZaW7XR
Financial-Crisis Panel Suggested Criminal Cases Against Stan O'Neal, Charles Prince, AIG Bosses
WSJ
It is still a sore spot for many Americans that hardly any Wall Street executives have faced criminal charges for the events that brought about the financial crisis. Eight years later, new clues are emerging about incidents that investigators looked atÂand how tough it was to advance those cases.
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Unfamiliar with irony, Swiss bankers are complaining of a "lack of transparency"
Matt Phillips - Quartz
Well this is awkward. Swiss bankers, taking stock of a US government crackdown on tax evasion, have criticized the effort on grounds that it lacked transparency. First, the background: On Jan. 27, the US Department of Justice said it had concluded the last non-prosecution agreement (NPA) in a string of 80 such deals that allowed Swiss banks to avoid prosecution for helping their customers evade US taxes. The agreements resulted in settlements totaling roughly $1.3 billion.
goo.gl/wr8DP6
EM credit binge will exact painful price
Bhanu Baweja - Financial Times
The ebb and flow of asset values through this year's young life has been larger than on previous occasions, but it is very unlikely that we are at a long-term inflection point for emerging markets. In the background of sentiment-motored noise one can pick up the steadily louder hum of increasing EM leverage, the bulk of it in the corporate sector. Despite this, EM corporate credit has held up better than US high yield. That energy figures more prominently in EM corporate benchmarks makes this outperformance more intriguing. Some argue that the relative resilience is explained simply by the fact that the majority of EM corporate credit is investment grade.
goo.gl/ixRyid
The U.S. Economy Has Stalled, Again
The Fiscal Times
While the stock market is back near three-year highs and job growth remains strong, U.S. economic growth has hit the skids once more. On Monday, in response to tepid personal spending data, the Federal Reserve Bank of Atlanta marked down its first quarter GDP growth estimate to just 0.6 percent  down from 1.4 percent just last week. The downward economic trend is clear. The Q1 "GDPNow" estimate from the Atlanta Fed is down from the 2.0 percent result posed in the third quarter of 2015, the 2.2 percent average growth rate seen in the first three quarters of 2015, and the 2.4 percent advance seen in 2014.
goo.gl/hlfPCJ
The Rise and Fall of Tim Leissner, Goldman's Big Man in Malaysia
Bloomberg
The prime minister of Malaysia had a message for the crowd at the Grand Hyatt San Francisco in September 2013. "We cannot have an egalitarian society -- it's impossible to have an egalitarian society," Najib Razak said. "But certainly we can achieve a more equitable society."
goo.gl/7XNXjL
Deutsche Bank agrees to pay $4 mln for trading violations
Reuters
A Deutsche Bank AG unit will pay more than $4 million to settle allegations that it failed to properly report data on millions of options trades, according to a Financial Industry Regulatory Authority (FINRA) document.
goo.gl/BA1zyt
Fears over impact of cap on bankers' bonuses 'unfounded'
Financial Times
Fears that a cap on bankers' bonuses would greatly inflate their fixed pay and damage financial stability have proved unfounded, according to a report from the European Banking Authority. Critics of the EU bonus cap  including the Bank of England  have argued that it could erode the stability of the financial system by increasing banks' fixed costs and reducing their ability to claw back bonuses if something goes wrong.
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| Central Banks | Europe's Bond Shortage Means Draghi Is About to Shock the Market
Lucy Meakin - Bloomberg
As European Central Bank Governor Mario Draghi prepares to increase and broaden his bond-buying program, the shrunken market might be in for a shock. While policy makers will expand their asset-purchase plan by 20 billion euros ($22.7 billion) a month at the start of April, corporate debt won't be included until later in the quarter. That's leaving investors to face even higher demand for government bonds with supply unable to keep up and some of Europe's biggest banks are predicting yields are headed for even more record lows.
goo.gl/jWWV2g
Why the Fed rate talk was 'a bunch of nonsense'
CNBC
The Federal Reserve was never hiking rates four times this year. Investors didn't believe it, and now Fed Chair Janet Yellen has all but explicitly acknowledged it. Indeed, Yellen's blockbuster speech Tuesday assuring that the central bank would go slowly on future adjustments to monetary policy only caught some of the market by surprise. Others realized there was virtually no chance of a hawkish Fed in 2016.
goo.gl/qzE0g0
The Bank of England's Draghi Moment
Josie Cox - Wall Street Journal
Goldman Sachs doesn't expect the U.K. to choose to leave the European Union in a June 23 referendum, but should pro-Brexit voters prevail, Bank of England officials might be forced to channel their very own inner Mario Draghi. In a note published this week, Goldman economist Andrew Benito says that in the event the U.K. chooses to leave the bloc, he would "expect the BoE to state that it will do whatever is necessary to maintain monetary and financial stability."
goo.gl/aMIoYJ
Yellen Outsources U.S. Monetary Policy to the Financial Markets
Bloomberg
The Federal Reserve looks to have outsourced monetary policy to the financial markets -- and that may not necessarily be bad. Fed Chair Janet Yellen told the Economic Club of New York on Tuesday that policy makers had scaled back the number of interest rate increases they expect to carry out this year after investors did the same.
goo.gl/0qg7IR
Big tests lie ahead after Yellen speech
Financial Times
Janet Yellen has spoken, and the US stock market has duly rolled on to a fresh high for the year. Where does this leave us? The Federal Reserve chair's speech to the New York Economics Club, an established venue for economic theatre, probably put the final touch to the Fed's developing strategy for reconciling the disparate parts of its mandate this year. Judged in isolation, both US unemployment and inflation data, which should matter most, justify further rate rises. The international situation raises concerns. Ms Yellen has now offered an elegant and very market-friendly rationale for the Fed to wait for the data, and to err on the side of leaving monetary policy too loose.
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Market Scramble: Hopes grow for government action -- and inaction
Nikkei Asian Review
Stock market players in Japan are increasingly counting on government and monetary policy to help equities turn around, just as they did in 2014.
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Coeure Says ECB Not Discussing Helicopter Money as Policy Tool
Bloomberg
The European Central Bank isn't discussing directly financing government stimulus, or "helicopter money," Executive Board member Benoit Coeure said. "To be honest, I don't see how it could work without some kind of risk-sharing with governments, which could be practically and legally problematic," Coeure said in an interview with Politico published on the ECB's website on Wednesday. "Whatever my own intellectual interest in helicopter money, as a Governing Council member I have a fair deal of skepticism and circumspection."
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Ask the Next President About the Fed
Narayana Kocherlakota - Bloomberg View
The next U.S. president will have the opportunity to appoint (or re-appoint) someone to one of the most powerful positions in the world: the chair of the U.S. Federal Reserve. Yet voters still know far too little about how the leading presidential candidates would go about choosing.
goo.gl/APkmD2
Opinion: It's not Fed 'dot plot' that's confusing; it's the whole idea of forward guidance
MarketWatch
While European intelligence agencies are trying to connect the dots between recent terrorist attacks in Paris and Brussels, economists in the U.S. are struggling to disentangle a different set of dots: those that offer insight on economic, not national, security. Specifically, a plot of dots, familiarly known as the "dot plot," has come under attack recently from some academics, including Narayana Kocherlakota, who until last year was president of the Federal Reserve Bank of Minneapolis.
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| | | | Currencies | Here's a New Monetary Policy Phrase: Chexit
Wall Street Journal
You've heard of "Brexit" and "Grexit" Â terms denoting the risk that Great Britain or Greece will exit the European Union. But what about "Chexit"? David Zervos, chief market strategist at Jefferies LLC, is trying to coin the term in a research note Wednesday to outline the key risk that he thinks the Federal Reserve wants to avoid: that of China's currency decoupling from the U.S. dollar. It's the first reference to the term that we've seen.
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The Effect of Exchange Rate Shocks on Domestic Prices
New York Fed
Changes in exchange rates directly affect import prices. Since the beginning of 2014, the U.S. dollar has strengthened by 17 percent against the currencies of its major trading partners while import prices have fallen by 4 percent. The pass-through from exchange rates into import prices in the United States is estimated to be quite low, at around 30 percent, and this is often attributed to the fact that imports are mostly invoiced in U.S. dollars. In addition to this direct impact of exchange rates on import prices, there can also be an effect on domestic prices. Suppose that a stronger U.S. dollar means that cars imported from Japan will be cheaper for U.S. consumers.
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The Pitfalls of Currency Manipulation
Seeking Alpha
Readers may recall that the last G20 pow-wow (see "The Gasbag Gabfest" for details) featured an uncharacteristic lack of grandiose announcements - a fact we welcomed with great relief. The previously announced "900 plans" which were supposedly going to create "economic growth" by government decree seemed to have disappeared into the memory hole. These busybodies deciding to do nothing is obviously the best thing that can possibly happen.
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Emerging-Market Currencies Set for Best Month in 18 Years on Fed
Bloomberg
It's been at least 18 years since emerging-market currencies had it this good as the Federal Reserve adopted a gradual approach to its rate-increase cycle, fueling optimism that capital inflows can be sustained.
goo.gl/pefYTk
| | | | Indexes & Index Products | Bats Global Markets to Acquire ETF.com, Broadening Content Offerings for Issuers, Brokers and ETF Investors; Transaction Expected to Close April 1st
BATS
Bats Global Markets, the leading exchange operator for the trading of exchange-traded funds (ETFs), and creator of the Bats ETF Marketplace, signed a definitive agreement to acquire ETF.com, a leading provider of ETF data, news and analysis.
goo.gl/h7uVNV
The What, Why, and How of Quality
Morningstar
Quality may be the fuzziest factor you will find in the investing world. There is no one agreed-upon definition for it, nor is there clear consensus that it is a true stand-alone factor. What's more, it is missing the risk story, the basic economic intuition, and the readily discernible behavioral underpinnings that explain the existence and persistence of the value factor. Here, I'll address what quality is, why it may or may not yield superior risk-adjusted returns, and how investors can harness it with exchange-traded funds.
goo.gl/M99Qgb
The S&P 500 is on pace to log its longest streak of calm since June
MarketWatch
After surging over 12% from their mid-February lows, stocks recently entered a quiet phase of range-bound trade that has given some investors an eerie feeling. The S&P 500 SPX, +0.47% and the Dow Jones Industrial Average DJIA, +0.50% ended Tuesday at their highest close of 2016, following dovish remarks by Federal Reserve Chairwoman Janet Yellen.
on.mktw.net/1RyDkzg
Smart Beta vs. the Monkeys
Chief Investment Officer
A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts," wrote economics professor Burton Malkiel in his 1973 book A Random Walk Down Wall Street. In the flurry of research papers and blog posts that have accompanied the rise of smart beta, some have leveled the same accusation at the investment world's new kid on the block. Specifically, that any portfolio selected by Malkiel's monkey would have the same value and small-cap biases that are found in factor-based strategies.
goo.gl/cfo97Q
FTSE Russell launches China A and H share index
Fund Strategy
The new index has been licensed by Deutsche Bank for ETFs listed on London Stock Exchange and Deutsche Börse. The FTSE China A-H 50 index will track the largest 50 China A share companies by market capitalisation but will invest in the lowest-priced share class between the A and H share classes.
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Post-Libor squeeze could stifle benchmarks, industry warns; Obligations set to mushroom for administrators and contributors
Catherine Contiguglia - Risk.net
European regulators are trying to clean up the business of benchmarking. Participants fear they will choke it instead. Tough new responsibilities for contributors - including ensuring the robustness of input data and its storage - may further shrink the pool of willing participants, critics warn. Administrators also face obligations that could make the business unattractive for smaller players, including overseas firms that will be caught in the dragnet if their benchmarks are used by European...
goo.gl/MwBCN1
| | | | Gold | Central bank action may rejuvenate gold in Europe
CNBC
Gold prices remain low in historical terms, despite a rally at the start of this year, but demand may yet appear from an unexpected source. Some precious metal experts see interest returning to Europe, in part because the push towards negative interest rates has made depositing cash with banks less and less rewarding.
goo.gl/eIbwCQ
Gold star: Seeking the origin of gold in the universe
phys.org
So you think the gold in your ring or watch came from a mine in Africa or Australia? Well, think farther away. Much, much farther. Michigan State University researchers, working with colleagues from Technical University Darmstadt in Germany, are zeroing in on the answer to one of science's most puzzling questions: Where did heavy elements, such as gold, originate? Currently there are two candidates, neither of which are located on Earth - a supernova, a massive star that, in its old age, collapsed and then catastrophically exploded under its own weight; or a neutron-star merger, in which two of these small yet incredibly massive stars come together and spew out huge amounts of stellar debris.
goo.gl/nl1YXL
| | | | Miscellaneous | Bank of America bans staff from saying 'Brexit'
Arash Massoudi and Patrick Jenkins - Financial Times
Bank of America is warning senior staff not to use the word "Brexit" when talking to clients as it tries to steer clear of the raging debate over the UK's membership in the European Union.
goo.gl/2mAlfH
Chase Bank blocks California man's online payment over service dog's 'terrorist' name
NY Daily News
A service dog's name gave this bank paws. Chase blocked a San Francisco man's online payment because his pitbull mix's moniker loosely resembles a terrorist network. Bruce Francis, 55, was transferring $374 from his account to his dogwalker at the beginning of March, and wrote his dog's name "Dash" in the memo line, as he's done every month for the past couple of years.
goo.gl/huN24Z
Losing Count: U.S. Terror Rules Drive Money Underground
WSJ
U.S. banks have closed thousands of accounts held by people and organizations considered suspicious, high-risk or difficult to monitorÂincluding money-transfer firms, foreign banks and nonprofits working abroad. Closing accounts for fear their customers may be up to no good evicts from the financial system the innocent as well as those the U.S. government would most like to watch, a consequence not anticipated by Washington.
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