Conversation Starter
MarketsWiki Interview: Five Minutes With Scott Early
Scott Early, a partner with Foley & Lardner LLP, is a member of the firm's securities, commodities and exchange regulation and transactional and securities practices. Early also is general counsel to the Kansas City Board of Trade and provides counsel to numerous other financial industry entities including exchanges and clearing houses. For 10 years prior to joining Foley, Early was general counsel to the Chicago Board of Trade (CBOT). Early recently talked with MarketsWiki senior editor/producer Christine Nielsen and discussed his views on an exchange for futures (EFF) block trade mechanism offered by ELX Futures that allows traders to move their Treasury futures positions from one exchange to the other. CME Group has claimed ELX's EFF violates CME's rules. Both exchanges have petitioned the Commodity Futures Trading Commission (CFTC) to decide the issue.
SE: None of the public discourse on this [subject] addresses the real issue...The real issue, in economic terms, is a natural entry barrier issue. If somebody is starting a new exchange and they want to come in and try to compete with an existing product at an existing exchange, they are at, as economists would call, a natural entry barrier disadvantage. That being said, traders need liquidity in order to be confident in trading. Liquidity means not just the ability to put on a trade, but more importantly the ability to get it off at a reasonable price - at a time of crisis, so to speak, when blood is running in The Street.
BrokerTec would be a decade-ago model for what ELX is doing now. BrokerTec also tried to make inroads into what was then the CBOT Treasury complex. The owners of BrokerTec were the Wall Street firms who comprised the majority of the primary government dealers in the cash side of government bonds.
Yet, they couldn't really make inroads into the established Board of Trade contract positions, because even their own traders who reported to different people didn't have the confidence that they could put a trade on at BrokerTec and get out of it at the price they needed to in times of crises, because of liquidity.
So what ELX is doing is...going after the Merc's market and trying to take it. Let's start with that premise. Not that they are just starting as an exchange and coming in with a new product.
What they are saying is that we know from prior experience about this natural entry barrier; but if we could figure out a way we could say to traders, you are perfectly free to put trades on with us, and if you're concerned about taking them off from us, we will give you a means by which you can take them off at the Merc. Now, that's a very unique situation in the context of economic regulation in what is otherwise a free market.
Because the analogy would be... well, Microsoft has the dominant share of the marketplace. A new market entrant says that if something goes wrong, Microsoft will substitute our product for it. If Microsoft refuses to do that, we are going to claim that they being are anticompetitive.
The superficial battle is not reflective of what the real battle is. What ELX is trying to do is to piggyback on the liquidity that the Merc has built up, most particularly, in its clearing house, which is proprietary.
To me, having said all that, when you talk about the difficulty in their rules in the context of the Commodity Exchange Act/ antitrust principles and anticompetitive principles, the discussion is 180 degrees from the reality. The reality is, why should ELX be allowed to have free access to the proprietary development of the Merc in their contract and their clearing house? And that's the question nobody is addressing publicly and upfront.
Now, it could be that somebody in Congress would say they think that's a good idea. They think that's it's pro competitive...These are public markets. They are regulated by Congress, by the Commodity Exchange Act, by the 1934 Act... So they think that should be permitted. But until Congress actually takes that kind of action you don't have a mandate in the Commodity Exchange Act that would permit [something to that effect].
Look at the model. I just gave you BrokerTec as a historical example and said that ELX is trying to do in essence [the same thing]... but you look at the only successful market entrant in the last 20 years - ICE - and they have been a very successful market entrant, and competitor. How did they do it?
ICE's CEO Jeffrey Sprecher came in, some would say by the back door. I would say he came in the side window. He came in with products that were basically just a little off of regulated futures. Today we would call them standardized swaps. They were non-regulated futures...Gradually he got himself into the position where he got those products to be listed universally.
He became - and has become - the only viable competitor to the CME as a result. The reason I mention this is that it's an example of how you can overcome this natural entry barrier that exists in the futures world. He's done it by taking himself kind of around the side and coming into the house that way. ELX is trying to come through the front door with a free pass.
***CN: See the full interview with Scott Early here: Five Minutes With Scott Early
Lead Stories
Are investors tiring of low rates? Buyers show tepid interest at 30-year Treasury auction
StarTribune.com/ AP
Treasurys are sliding after investors showed a weak appetite for a sale of government bonds. The Treasury sold $13 billion in 30-year bonds Thursday in its third and final auction this week. The bonds were sold to yield 3.85 percent, near the lowest rate for a sale of 30-year debt this year. Investors placed bids for 2.49 times the amount of 30-year bonds on offer, far below the average over the past year. Traders blame low rates for sapping demand at this week's auctions. Unlike other Treasury rates, however, the 30-year bond's yield has actually climbed in recent months. The main reason, traders say, is that few expect the Federal Reserve to target the 30-year if it begins a new bond-buying effort to boost the economy.
http://jlne.ws/aFD4I3
***CN: The Treasury complex saw quite a knee-jerk reaction to the auction. Yields on 10-year notes rose 6 basis points to 2.49%.
Weekend in Washington: Cooperating Our Way Out of Crisis
By Dominique Strauss-Kahn, IMF Direct
This past weekend in Washington DC, as the economic leaders of 187 countries gathered for the Annual Meetings of the IMF and World Bank, the mood was tense. The world’s finance ministers and central bank governors were concerned because the global recovery is fragile. And uneven. And it is fragile because it is so uneven.
http://jlne.ws/atBo8k
New Normal: 7%-8% Unemployment?
By Kathleen Madigan, WSJ.com
Not so long ago, the economy was thought to be doing fine if the unemployment rate hovered around 4%. The new normal may be more like 7% to 8%, a situation that worsens the outlook not only for job seekers but also the forecasts for public finances.
http://jlne.ws/bL7R4w
30-year fixed-rate mortgage avg at all-time low
By Sue Chang, MarketWatch
Freddie Mac /quotes/comstock/11k!fmcc (FMCC 0.33, +0.01, +1.72%) said Thursday the 30-year fixed-rate mortgage average fell to an all-time low of 4.19% with an average 0.8 point for the week ending Oct. 14. In the previous period, the average was 4.27%, and the year-ago average was 4.92%. As of this week, the 30-year rate has been under 5% for 23 weeks in a row.
http://jlne.ws/cjZkZ1
Further Fed Easing Could Alarm `Bond Market Hawks,' Historian Meltzer Says
By Joshua Zumbrun and Betty Liu, Bloomberg
The Federal Reserve’s efforts to boost the economy by expanding its balance sheet probably won’t succeed while increasing the chances of higher long-term inflation, said Allan Meltzer, a historian of the central bank.
http://jlne.ws/b5ISgy
U.S. is currency war's "tomb maker": China economist
Reuters
The United States fired the first shot in the currency war and the rest of the world must be on guard for its deliberate strategy to devalue the dollar, a Chinese economist said in an official newspaper on Thursday.
http://jlne.ws/bPFhRB
***CN: Lots of international news stories negative on the U.S. economy and dollar this week.
Opposing view on markets: SEC, CFTC weighing safeguards
By Mary L. Schapiro and Gary Gensler, USATODAY.com
The missions of the Securities and Exchange Commission and the Commodity Futures Trading Commission are to protect investors and ensure our derivatives and securities markets are as fair, transparent and efficient as possible. Both agencies have been engaged in a comprehensive review of the structures of our markets to determine how we can improve the way they work.
http://jlne.ws/9E00z4
***CN: Note the byline on this story.
NY Fed Conducts Reverse Repo Test
By Deborah Lynn Blumberg, WSJ.com
The Federal Reserve Bank of New York conducted its first small-scale test of its reserve draining reverse repurchase agreement with expanded repo counterparties Wednesday afternoon.
http://jlne.ws/9Azosi
Trillion-dollar deficits don’t matter
By David Stockman, MarketWatch
The oracles at Goldman Sachs Group say that $750 billion of quantitative easing is priced in to the market, and possibly $1 trillion — a frightful prospect that was hardly diminished by last week’s lost jobs report.
http://jlne.ws/blmkMA
New IRS Rules for Tax Preparers Spur Questions
By Peter Schroeder, The Bond Buyer
Municipal market participants have many questions about new rules adopted by the Internal Revenue Service that require paid tax preparers to register with it, possibly take competency tests, and pay penalties for improper filings.
http://jlne.ws/9y5TkG
Minutes Signal Fed ’Uncertainty’ About Additional Stimulus
By SEWELL CHAN, The News
Federal Reserve officials are grappling with “considerable uncertainty” about the outlook for the economy as they confront a pivotal decision over whether to try to jump-start the torpid recovery by buying large quantities of government debt.
http://jlne.ws/bd9N1k
El-Erian Says 'Slow Disease' Is Eating Financial Markets
By Antonia Oprita, CNBC
The financial crisis has left behind a "slow disease" that is eating into financial markets, and this is obvious in stock prices and currencies, but less so in bonds for the moment, Mohamed El-Erian, CEO and co-chief investment officer of Pimco, told CNBC Tuesday.
http://jlne.ws/aQsb7S
White House opposes broad foreclosure moratorium
Reuters
The White House on Tuesday rejected calls for a broad moratorium on home foreclosures, saying it feared such a step could harm the U.S. housing market and hinder a housing recovery.
http://jlne.ws/9UQMp9
Economists Cut U.S. Growth Forecasts Through 2011, Survey Shows
By Courtney Schlisserman, Bloomberg
The U.S. economy, the world’s largest, will expand less than previously estimated as a lack of jobs restrains consumer spending through 2011, a survey showed.
http://jlne.ws/bBBVaZ
Nobel Prize for Economics awarded to Christopher Pissarides
Press Release, LSE
LSE professor Christopher Pissarides was awarded the Nobel Prize for Economic Sciences today. He won the 2010 prize jointly for his work on the economics of unemployment, especially job flows and the effects of being out of work. He shares the prize with Peter Diamond from Massachusetts Institute of Technology and Dale Mortensen from Northwestern University.
http://jlne.ws/cqpb44
OECD: Global Economy Slowing
BY PAUL HANNON, WSJ.com
The world economy appears to be slowing, with most developed and large developing economies already in a downturn, the Organization for Economic Cooperation and Development said Monday.
http://jlne.ws/aeM28o
CFTC to Review Computer Trades Behind May 6 Stock Plunge for Swaps Reform
Bloomberg
The U.S. Commodity Futures Trading Commission will examine how computerized trading that led to the May 6 stock market plunge should affect regulatory reform of the derivatives market mandated by the Dodd-Frank Act, according to an e-mailed statement from the CFTC.
http://jlne.ws/9WILCk
Non-Bank Companies Poised for Fed Scrutiny on Systemic Risk
Bloomberg
It has the makings of a Wall Street parlor game: Guess which firms will be designated for Federal Reserve oversight because they could pose a risk to U.S. financial stability.
http://jlne.ws/dkgK2q
TARP a 'Four-Letter Word' for Voters Even as Bailout Cost Estimates Plunge
By Brian Faler, Bloomberg
Senator Mark Begich tries to give his Alaska constituents the good news about the bank bailout.
http://jlne.ws/cKiAnn
Events
Basel III - Agreed Upon Mandates
When: Oct. 19, 2010
Where: Online
Full info: http://jlne.ws/db1Qvf
Details: The Basel III framework seeks to strengthen the risk-based capital regulation, regulatory supervision principles and risk management practices in the banking sector. It reduces systemic risk and improves the banking sector's ability to absorb shocks arising from financial and economic stress by increasing the quality and quantity of regulatory capital, extending capital requirements, implementing liquidity standards, and improving transparency and disclosure. Basel III also strengthens the capital requirements for counterparty credit risk exposures arising from derivatives, repos, and securities financing activities. This webinar, the second in a series of three webinars on the Basel III Accord, provides an overview of the accepted mandates. It specifically addresses the effect increased capital levels have on banks, their ratings, and their ability to intermediate credit as well as the impact regulatory capital changes have on counterparty credit risk exposures. Presenters include Peter Went Ph.D., CFA, senior researcher, GARP Research Center and Alain Laurin, senior vice president, Credit Policy Committee, Moody’s Investors Service
Making Sense of Credit Default Swaps
When: Oct. 21, 2010
Where: Chicago
Full info: http://www.theifm.org/
Details: This one-day course will provide an overview of the CDS markets and how market participants use this product to express a view on a credit, or to hedge an undesirable credit risk.
Mortgage Foreclosures and the Future of Housing Finance
When: Oct. 25-26, 2010
Where: L. William Seidman Center, Arlington, VA
Full info: http://www.chicagofed.org/webpages/events/2010/frbc_fdic_mortgage_foreclosure.cfm#
Details: The Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) are co-hosting a two-day conference highlighting policy-oriented research focused on U.S. housing and mortgage markets. The conference will emphasize two major issues: mortgage foreclosures and the future of housing finance. We will evaluate the current foreclosure situation, emphasizing the adverse neighborhood spillover effects and evaluations of efforts to mitigate foreclosures including loan modification efforts. We will also take a broader perspective and evaluate the future of housing finance. This will include an evaluation of the mortgage interest tax deduction, affordable housing issues, the future role of government-sponsored entities, the future of private-label mortgage securitization, the viability and role of private mortgage insurance, and the role of the Community Reinvestment Act.
Economic News
Employers in U.S. Cut More Jobs Than Forecast in September
By Timothy R. Homan, Yahoo! Finance
The U.S. lost more jobs than forecast in September, reflecting a decline in government payrolls that shows the damage being done by rising fiscal deficits.
http://jlne.ws/bbumxk
Import Prices in U.S. Fell in September, Reflecting Drop in Oil
By Courtney Schlisserman, Bloomberg
The cost of goods imported into the U.S. fell more than forecast in September, contributing to a slowdown in inflation that is concerning the Federal Reserve.
http://jlne.ws/bqJxKF
Exchanges, Clearing Houses & MTFs
CME Group Said to Start Clearing Interest-Rate Swaps as Soon as Next Week
By Matthew Leising, Bloomberg
CME Group Inc., the world’s largest futures exchange, plans to begin clearing interest-rate swaps next week in a race to dominate what a London competitor has called a “battleground” U.S. market.
http://jlne.ws/dxnzzJ
LSE launches CFD ‘swaps portal’
By Jeremy Grant, FT.com
The London Stock Exchange on Wednesday launched a “swaps portal” designed to automate the trading of contracts for difference and other equity derivatives, under its UnaVista business unit.
http://jlne.ws/bPYGWt
Exchanges blast a familiar foe: broker-run rivals
By Jonathan Spicer, Reuters
Some of the world's biggest exchange operators pushed on Monday for new rules that would relieve them of the intense pressure brought on by broker-run venues, with one executive tying these smaller rivals to computer-based trading techniques that provide little good.
http://jlne.ws/dtkmrx
Firms & Banks
U.S. Home Seizures Reach Record Amid Foreclosure Review
By Dan Levy. Bloomberg
More than 100,000 U.S. homes were seized by lenders in September, a record number that probably will decline in coming months as major banks halt repossessions and review their foreclosure practices.
http://jlne.ws/bjXrt1
FINRA Foundation Military Financial Capability Survey Reveals Military Debt Problem
The FINRA Investor Education Foundation today released a survey revealing that debt is a major concern for military families, with almost 82 percent of military servicemembers reporting that they are at least $10,000 in credit card debt, or have an auto or mortgage loan. The Military Survey – one of three linked surveys analyzing the financial capability of American adults – measures, for the first time, the overall financial capabilities of U.S. military personnel. The Military Survey was developed in consultation with the U.S. Department of the Treasury and the President's Advisory Council on Financial Literacy.
http://jlne.ws/dqkveH
UBS: no legal action against former execs
By COLLEEN BARRY, AP
UBS, Switzerland's largest bank, said Thursday it will not take legal action against former executives and board members for the huge losses suffered during the U.S. subprime crisis that forced a bailout.
http://jlne.ws/dkXhWu
Nomura Plans Expansion of Australian Fixed-Income Team to Meet Asia Demand
By Candice Zachariahs, Bloomberg
Nomura Holdings Inc., Japan’s largest brokerage, will next year expand its fixed-income team for Australia as demand for the region’s assets grows with Asia leading the global economic recovery.
http://jlne.ws/dA5juC
Goldman No. 1 at Rating Financial Companies With 38% Right
By Nikolaj Gammeltoft, Bloomberg
It’s been a rough three years for banks, securities firms and insurers -- even rougher for the analysts whose job it is to predict how the stocks of these firms will perform, Bloomberg Markets reports in its November issue.
Bloomberg
http://jlne.ws/bfPACF
David Martin takes JP Morgan OTC clearing post
By Jeremy Grant, FT.com
JP Morgan has appointed David Martin, a one-time floor trader on the London International Financial Futures Exchange, as head of futures and options and OTC [over-the-counter] clearing for Europe.
http://jlne.ws/bbrEEn
Investment bank profits crumble at JP Morgan
eFinancial News
The investment banking division of JP Morgan Chase has reported its lowest profits and worst return on equity since the collapse of Lehman Brothers in a stark illustration that the artificially benign conditions for investment banks created in the aftermath of the financial crisis could have come to an end.
http://jlne.ws/aR3AXQ
Insurers May Outsource Investments on Solvency Rules, Deutsche Bank Says
Bloomberg
"The world of insurers' investment management has totally changed following the financial crisis," said Joerg Triesch , head of insurance fixed income at Deutsche Insurance Asset Management, a unit of Frankfurt-based Deutsche Bank. We expect more business because of capital markets' increased complexity as well as Solvency II and other new regulatory requirements.
http://jlne.ws/cbA2OV
Jefferies: the bank that keeps on hiring
eFinancial News
Last October, Financial News compiled a list of some of the 250 new staff brought in during 2009. Here we keep you up to date with this year's intake.
http://jlne.ws/d0X72y
UBS Plans 'Transparency Report'
By KATHARINA BART, WSJ.com
ZURICH-UBS AG is set to give shareholders more insight into how it nearly collapsed under the weight of billions in toxic securities in 2008, but the Zurich-based bank's efforts to quell fury with former managers may fall short of some investors' expectations.
http://jlne.ws/bLCSDz
R.J. O'Brien Promotes Jason Manumaleuna To Chief Financial Officer
Press Release
R.J. O'Brien And Associates LLC (RJO), the largest independent futures brokerage firm in the United States, announced today the promotion of Jason Manumaleuna to Senior Vice President/Chief Financial Officer. He will report to Tom Anderson, Chief Financial Officer of R.J. O'Brien Holdings.
http://jlne.ws/cxgbC5
Bankers May Get 25% of Bonuses in Immediate Cash Payouts Under EU Proposal
By Ben Moshinsky, Bloomberg
Bankers may get a quarter of their bonuses in immediate monetary payouts under rules proposed by European Union regulators, which would allow as much as half of overall awards to be paid in cash rather than shares.
http://jlne.ws/8ZQxEx
Expert Warns Banks More Exposed to Derivatives Now Than in 2008
Finance Technology Network
Could banks really be more exposed to derivatives than they were two years ago? That's what Harold Bradley, the chief investment officer for the Kauffman Foundation contends in a discussion on CNBC with Maria Bartiromo and Herb Greenberg.
http://jlne.ws/aLIOCq
Auctions & Statistics
Treasury to Sell $24B Year Bills
By Gary Siegel, The Bond Buyer
NEW YORK - The Treasury Department said it will auction $24 billion year bills on Tuesday, October 19.
http://jlne.ws/d0fpyH
Regulators
Statement by CFTC Chairman Gensler and SEC Chairman Schapiro on the Joint Report Regarding the Market Events of May 6th
Press Release
The staffs of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) today released a joint report presenting their findings regarding the market events of May 6, 2010. The report will be presented to the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues. Twelve days after May 6th, the staffs of the Commissions released a preliminary report on the events of that day.
http://jlne.ws/9PrpuQ
CFTC to Hold Open Meeting on Second Series of Proposed Rules under the Dodd-Frank Act
The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Tuesday, October 19, 2010, at 9:30 a.m. to consider the issuance of the following proposed rulemakings under the Dodd-Frank Wall Street Reform and Consumer Protection Act:
http://jlne.ws/auf975
Geithner Signals China Causing Global Currency Interventions
By Ian Katz and Brendan Murray, Bloomberg
U.S. Treasury Secretary Timothy F. Geithner blamed China’s policy of limiting gains in the yuan for contributing to a round of capital controls and currency-market interventions by emerging economies.
http://jlne.ws/a0eQA5
FDIC chief puts case for losses by creditors
By Tom Braithwaite, FT.com
Creditors and derivatives counterparties of a future failing institution such as AIG or Lehman Brothers should expect to suffer losses on the value of their holdings, the Federal Deposit Insurance Corporation said on Tuesday.
http://jlne.ws/bCyrqf
Debit card issuer sues Fed chairman over fees
San Francisco Chronicle, AP
TCF National Bank sued Federal Reserve chairman Ben Bernanke and the Fed's board of governors on Tuesday, saying regulations limiting the fees a bank can charge retailers for...
http://jlne.ws/b4xKkE
Fed members weighed bond buys in September
By Greg Robb, MarketWatch
Several Federal Reserve officials thought that it would "soon" be appropriate for a second round of quantitative easing to boost the economy, according to a summary released Tuesday of the discussion at their Sept. 21 meeting. Fed officials said the statement released after their meeting included an indication that easing may be needed "before long." They held off easing in September to gather more data and discuss how best to communicate about any new stimulus, the minutes show. The discussion about easing focused primarily on further Treasury purchases and also on steps to lift inflation expectations.
http://jlne.ws/aN7e45
Fed’s Dudley Confident Banks Will Adapt To New Rules
By Luca Di Leo, WSJ.com
New York Federal Reserve Bank President William Dudley on Monday downplayed the potential impact that banks face from new capital standards, saying it will be easier for them to adapt than many observers think.
http://jlne.ws/cmJITK
SIFMA Calls System Wide Moratorium On All Foreclosures 'Catastrophic'
Press Release
The Securities Industry and Financial Markets Association (SIFMA) today issued the following statement from Tim Ryan, president and CEO, on the foreclosure moratorium related to issues in foreclosure processing:
http://jlne.ws/cxgbC5
Fed's Yellen: Possible that low rates feed bubbles
By Ann Saphir, Reuters
Low interest rates can contribute to financial bubbles even if they are not a primary culprit, Janet Yellen said in her first speech as vice chair of the Federal Reserve.
http://jlne.ws/bIaG2r
FDIC May Seek More Than $1 Billion From Failed-Bank Executives
By Phil Mattingly, Bloomberg
The Federal Deposit Insurance Corp. has authorized lawsuits against more than 50 officers and directors of failed banks as the agency aims to recoup more than $1 billion in losses stemming from the credit crisis.
http://jlne.ws/aB5I3b
OTC
OTC Rate Swaps Market Sufficiently Transparent, Says ISDA Survey
By Katy Burne Of DOW JONES NEWSWIRES
A survey by the International Swaps and Derivatives Association of corporate end-users and investment managers shows the majority of respondents believe the over-the-counter interest rate derivatives market is sufficiently transparent, the association claims.
http://jlne.ws/c5MIBT
CDS Aren't Always Sound Indicators Of Credit Risk -Fitch
By Katy Burne Of DOW JONES NEWSWIRES
Credit default swaps, derivatives that compensate investors when a company defaults on its debt, are commonly used to assess the relative riskiness of senior corporate bonds, but are not always an accurate predictor of future defaults, according to a new report from Fitch Ratings. That's because the behavior of CDS market participants can distort the perception of a company's risks, the ratings agency said.
http://jlne.ws/bbNu3g
U.S. may see 100 new swap execution entities-broker
By Christopher Doering and Roberta Rampton, Reuters
The U.S. futures regulator may have underestimated the number of new entities that will register to trade or execute swaps under new Wall Street reforms, an industry official said on Tuesday. Gary Gensler, the head of the Commodity Futures Trading Commission, initially estimated last month that 20 to 30 new entities could register as swap execution facilities, or SEFs, but has since upped his estimate to 40.
http://jlne.ws/a9uj0r
Study highlights CDS shortcomings
By Aline van Duyn in New York, FT.com
Financial derivatives that are widely tracked as a measure of creditworthiness of companies and countries have in many cases been poor indicators of default in the financial crisis, says Fitch Ratings. The findings of the Fitch study highlight how privately-traded credit default swaps, where even the most actively traded contracts change hands only a few times per day, are influenced by many factors beyond the fundamental credit positions of companies or countries concerned.
http://jlne.ws/9NpMtq
Global News
Singapore to Allow Stronger Currency Even as Economy Contracts
By Shamim Adam, Bloomberg
Singapore unexpectedly signaled it will allow faster currency gains to curb inflation even as the economy shrank, with slowing global growth hurting demand for drugs and electronics. The local dollar rose to a record.
http://jlne.ws/9Z9Jod
ECB Prints 500-Page Book in Defense of Monetary Pillar
By Nina Koeppen, WSJ.com
The European Central Bank Thursday — in a book that has almost 500 pages — staunchly defended the role of money in its conduct of monetary policy, arguing it provides valuable signals of risks to price stability.
http://jlne.ws/9NrVsI
Loomis Sayles' Fuss says buying Irish govt bonds Reuters
Reuters
Dan Fuss, who as vice chairman at Loomis Sayles helps oversee $150 billion, said on Wednesday the firm has been buying Irish government debt aggressively in recent weeks for its attractive yield and "very decent" credit quality.
http://jlne.ws/ca9meA
Weber Says ECB Should Phase Out Bond Purchases `Now'
By Gabi Thesing and Rainer Buergin, Bloomberg
European Central Bank Governing Council member Axel Weber said the ECB should stop its bond- purchase program, threatening to remove a lifeline for European governments and banks trying to shore up their finances.
http://jlne.ws/92Pn7H
Gillard Warns of 'Patchwork' Australian Economy
BY RACHEL PANNETT, WSJ.com
Australian Prime Minister Julia Gillard warned Tuesday that Australia risks developing a "patchwork" economy where the booming mining sector outperforms manufacturing and service sectors, especially as the Australian dollar exchange rate flirts with parity against its U.S. counterpart.
http://jlne.ws/9Bmw7d
Ireland Can Cut Deficit, Avoid Bailout
By Louisa Fahy and Colm Heatley, Bloomberg
Irish Finance Minister Brian Lenihan said he’s “absolutely” sure the country will avoid a bailout as he weighs cutting welfare payments and pensions to narrow the euro region’s biggest budget deficit.
http://jlne.ws/aLg0um
Bloated cajas face fresh wave of cuts
By Victor Mallet, FT.com
Only months after two emergency rescues and a wrenching series of mergers among Spanish cajas de ahorros or savings banks, a second round of consolidation is being predicted by the country’s bankers, officials and financial analysts.
http://jlne.ws/cxzcOV
Regulators Could Seize Control of Failing Banks Under EU Plan
By Ben Moshinsky, Bloomberg
Regulators may be given powers to take control of banks that fail to meet capital requirements, under European plans to step in earlier during financial crises.
http://jlne.ws/bxUpFn
ECB member: Learn lessons of pre-crisis decade
By Ronald D. Orol, MarketWatch
Global policy makers have a lot to learn from the decade before the financial crisis that shook the economy to the brink in September 2008, a key central banker said Friday.
http://jlne.ws/9ab6dD
Why interest rates are going nowhere fast
Globe and Mail
Bank of Nova Scotia expects short-term borrowing costs to remain at ultra-low levels well into next year as the global economy moves into a "slower lane of growth."
http://jlne.ws/dypvIX
EU Regulators Propose Tougher Bonus Caps
BY SARA SCHAEFER MUÑOZ, WSJ.com
The Committee of European Bank Supervisors settled a dispute over new bank-compensation rules in Europe by taking a tougher stance on how much of a bankers' bonus can be paid in cash up front, rejecting pressure from the U.K. and other countries that had sought to water down the rules.
http://jlne.ws/96fmZm
Trichet on 'Battlefield' Edge as Euro Climbs to $1.40
BusinessWeek
European Central Bank President Jean-Claude Trichet is bucking the global push toward easier monetary policy, fueling the euro's advance just as finance chiefs convene in Washington amid concern of a "currency war."
http://jlne.ws/dsJikR
France to seek G20 global monetary overhaul
By Jan Strupczewski and David Lawder, Reuters
France will start talks on overhauling the global monetary system during its G20 presidency to improve policy coordination and stem capital flows distorting exchange rates, Economy Minister Christine Lagarde said on Thursday.
http://jlne.ws/9NAvdV
Brussels urged to 'fine-tune' Basel III rules
By Nikki Tait in Brussels, FT.com
European lawmakers are urging European Union policymakers in Brussels to "fine-tune" the new Basel rules on bank capital, which were agreed internationally last month, when applying them to EU institutions.
http://jlne.ws/9DT8eb
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