The trouble with financial crises is that they’re boring. Originally, crises with global implications all came from the UK. Then they all came from the US. Nobody else had the size of capital and global connections to transmit mistakes to other countries. However, there is some hope that the next crisis will come from China:
China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.
Twenty-five bullion processors made a combined profit of more than 900 million yuan by using the loans to take advantage of the difference between onshore and offshore interest rates, and the appreciation of Chinese currency, according a report on the National Audit Office’s website. China is the biggest producer and consumer of gold.
Public security authorities are also probing alleged fraud at Qingdao Port where the same stockpiles of copper and aluminum may have been pledged multiple times as collateral for loans. As much as 1,000 tons of gold may be tied up in financing deals in China, in which commodities including metals and agricultural products are used to get credit amid restrictions on lending, according to World Gold Council estimates through 2013.
A recent lawsuit illustrates the total intellectual bankruptcy of the money management industry:
Schneiderman’s case is the boldest initiative and may open fissures in the decade-old defense of U.S. equity markets that has been championed by brokerages and traders. In their version of the story, dark pools serve as havens for institutional investors tired of seeing orders to buy and sell stocks front-run on public exchanges. According to Schneiderman, institutions may not have been much safer on Barclays’ platform.
“There’s going to be a significant amount more scrutiny on routing practices at dark pools, and I think you’re going to see more oversight,” said Larry Tabb, chief executive officer of Tabb Group LLC.
…
Barclays was so bent on lifting its private trading venue to the upper ranks of Wall Street dark pools that it falsified marketing materials to hide how much high-frequency traders were buying and selling, the complaint said.Seeking to reassure customers that their stock orders wouldn’t be picked off by predatory counterparts, Barclays touted a system designed to keep that from happening called liquidity profiling, according to the complaint. Marketing material including charts purported to show that very little of the trading within the dark pool was “aggressive” and that operating there was safe for institutions.
“The representations were false,” according to the complaint. The chart and accompanying statements obscured the trading taking place in Barclays’ dark pool. Senior Barclays personnel de-emphasized the presence of high-frequency traders and left out reference to one of the largest and most toxic participants, it said.
Um … who cares? If your order is filled, it’s filled. If it ain’t, it ain’t. Only morons care about the identity of their counterparty. “Sorry, Mr. Smith, your portfolio underperformed the benchmark by 500bp, but on the positive side, we traded only with retired Sunday School teachers.”
You don’t choose a broker on the basis of its marketing materials, for God’s sake. You make a choice based on execution. But maybe I’m just old fashioned.
Here’s a good reason to pay cash – always:
You may soon get a call from your doctor if you’ve let your gym membership lapse, made a habit of picking up candy bars at the check-out counter or begin shopping at plus-sized stores.
That’s because some hospitals are starting to use detailed consumer data to create profiles on current and potential patients to identify those most likely to get sick, so the hospitals can intervene before they do.
Information compiled by data brokers from public records and credit card transactions can reveal where a person shops, the food they buy, and whether they smoke. The largest hospital chain in the Carolinas is plugging data for 2 million people into algorithms designed to identify high-risk patients, while Pennsylvania’s biggest system uses household and demographic data. Patients and their advocates, meanwhile, say they’re concerned that big data’s expansion into medical care will hurt the doctor-patient relationship and threaten privacy.
I told you guys this was coming! I told you! But does anybody ever listen to me? No.
Could it be that Putin’s policies are creating Soviet Union Redux:
State enterprises now account for more than half of the economy, up from 30 percent when Putin came to power at the end of 1999, according to BNP Paribas SA. (BNP) As the bureaucracy swelled during that period, Russia emerged as the world’s most corrupt major economy. It ranks alongside Pakistan and Nicaragua at 127th, out of 176 nations, by Transparency International, down from 82nd in 2000.
With Russia’s $2 trillion economy stagnating, fixed investment falling and the U.S. and the EU warning of a tougher round of sanctions over the pro-Russian revolt in eastern Ukraine, Putin’s solution is a list of proposals revealed in May that involve a greater role for the state. He ordered the central bank to set up long-term financing for manufacturers and called for rules to force “systemically important” companies to move their registrations inside Russia.
On the other hand, there are sufficient interconnections to keep things interesting:
Western companies are already wrestling with the thorny problem of complying with existing curbs on dealings with a limited number of wealthy Putin allies and their businesses, many of which have murky ownership structures and bases in tax havens. Now, the U.S. Chamber of Commerce and the National Association of Manufacturers have taken out full-page ads in The New York Times, Wall Street Journal and Washington Post to decry the prospect of unilateral sanctions that would only hurt U.S. companies in foreign markets, while benefiting their competitors.
…
Indeed, 83 per cent of economists polled by Bloomberg now think Washington will steer clear of stronger sanctions, compared with 66 per cent a month earlier. And 96 per cent expect no further action from the European Union.“There is no sense in seeking sanctions which would harm the EU as much as Russia,” Czech State Secretary for European Affairs Tomas Prouza declared.
Bullard is sounding rather like a hawk:
Federal Reserve Bank of St. Louis President James Bullard predicted the central bank will raise interest rates starting in the first quarter of 2015, sooner than most of his colleagues think, as unemployment falls and inflation quickens.
Asked about his forecast for the timing of the first interest-rate increase since 2006, he said: “I’ve left mine at the end of the first quarter of next year.”
“The Fed (FDTR) is closer to its goal than many people appreciate,” Bullard said today in an interview with Fox Business Network. “We’re really pretty close to normal.”
…
Bullard predicted the jobless rate may fall below 6 percent and inflation rise near 2 percent by the end of this year.If his forecasts bear out, “you’re basically going to be right at target on both dimensions possibly later this year,” Bullard said. “That’s shocking, and I don’t think markets, and I’m not sure policy makers, have really digested that that’s where we are.”
It was another positive day for the Canadian preferred share market, with PerpetualDiscounts winning 12bp, FixedResets up 8bp and DeemedRetractibles gaining 2bp. Volatility was average. Volume was above average.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3598 % | 2,532.3 |
| FixedFloater | 4.32 % | 3.59 % | 28,940 | 18.17 | 1 | 0.9170 % | 3,978.1 |
| Floater | 2.90 % | 2.97 % | 44,444 | 19.79 | 4 | 0.3598 % | 2,734.1 |
| OpRet | 4.37 % | -12.58 % | 22,419 | 0.08 | 2 | 0.0194 % | 2,716.3 |
| SplitShare | 4.72 % | 4.06 % | 58,336 | 3.16 | 6 | -0.1439 % | 3,106.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0194 % | 2,483.8 |
| Perpetual-Premium | 5.53 % | -1.35 % | 80,718 | 0.09 | 17 | -0.0809 % | 2,408.7 |
| Perpetual-Discount | 5.26 % | 5.25 % | 114,610 | 14.98 | 20 | 0.1202 % | 2,556.7 |
| FixedReset | 4.45 % | 3.68 % | 204,092 | 4.80 | 78 | 0.0776 % | 2,551.1 |
| Deemed-Retractible | 4.98 % | -0.28 % | 140,668 | 0.09 | 43 | 0.0204 % | 2,541.0 |
| FloatingReset | 2.66 % | 2.31 % | 120,668 | 3.87 | 6 | 0.0658 % | 2,502.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| MFC.PR.B | Deemed-Retractible | -2.05 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.92 Bid-YTW : 5.75 % |
| BNA.PR.C | SplitShare | -1.45 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2019-01-10 Maturity Price : 25.00 Evaluated at bid price : 24.51 Bid-YTW : 4.92 % |
| W.PR.J | Perpetual-Premium | -1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-06-26 Maturity Price : 24.60 Evaluated at bid price : 24.86 Bid-YTW : 5.74 % |
| BAM.PR.B | Floater | 1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-06-26 Maturity Price : 17.51 Evaluated at bid price : 17.51 Bid-YTW : 2.99 % |
| BAM.PR.X | FixedReset | 1.76 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-06-26 Maturity Price : 22.11 Evaluated at bid price : 22.50 Bid-YTW : 3.99 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.K | FixedReset | 486,751 | Called for redemption. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.39 Bid-YTW : 0.20 % |
| ENB.PF.C | FixedReset | 208,951 | Nesbitt crossed 50,000 at 25.14; Scotia crossed 75,000 at the same price. Desjardins crossed 50,000 at 25.15. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-06-26 Maturity Price : 23.17 Evaluated at bid price : 25.15 Bid-YTW : 4.19 % |
| RY.PR.H | FixedReset | 163,470 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-06-26 Maturity Price : 23.24 Evaluated at bid price : 25.28 Bid-YTW : 3.73 % |
| MFC.PR.H | FixedReset | 160,518 | Scotia crossed 25,000 at 26.20; TD crossed 30,000 at 26.20. RBC crossed 68,500 at 26.25, and Scotia crossed another 25,000 at 26.22. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-03-19 Maturity Price : 25.00 Evaluated at bid price : 26.11 Bid-YTW : 2.94 % |
| MFC.PR.J | FixedReset | 102,000 | Scotia crossed two blocks of 50,000 each, both at 25.83. YTW SCENARIO Maturity Type : Call Maturity Date : 2018-03-19 Maturity Price : 25.00 Evaluated at bid price : 25.79 Bid-YTW : 3.13 % |
| SLF.PR.H | FixedReset | 82,859 | RBC crossed 80,000 at 25.15. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.04 Bid-YTW : 3.81 % |
| There were 38 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| GWO.PR.H | Deemed-Retractible | Quote: 23.80 – 24.33 Spot Rate : 0.5300 Average : 0.2984 YTW SCENARIO |
| CIU.PR.A | Perpetual-Discount | Quote: 22.76 – 23.20 Spot Rate : 0.4400 Average : 0.2870 YTW SCENARIO |
| GWO.PR.M | Deemed-Retractible | Quote: 26.20 – 26.54 Spot Rate : 0.3400 Average : 0.2034 YTW SCENARIO |
| MFC.PR.B | Deemed-Retractible | Quote: 22.92 – 23.37 Spot Rate : 0.4500 Average : 0.3290 YTW SCENARIO |
| BNA.PR.C | SplitShare | Quote: 24.51 – 24.85 Spot Rate : 0.3400 Average : 0.2217 YTW SCENARIO |
| GWO.PR.R | Deemed-Retractible | Quote: 23.61 – 24.00 Spot Rate : 0.3900 Average : 0.2754 YTW SCENARIO |