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Daily Scan: Rates stay steady, markets dip
Capital Markets
<p>September 17</p> <p>Good evening.</p> <p>The decision is out: the Federal Reserve will not be raising interest rates yet, but Chairwoman Janet Yellen promises that a 2015 rate rise is still the goal. Stocks were up slightly midday, but dipped after the Fed announcement. The Dow closed with a 0.4% loss. The S&amp;P 500 fell 0.3%, but the Nasdaq posted a 0.1% gain. Oil fell slightly, dropping just below $47/barrel.</p> <p>Here's what else you need to know:</p> <p>Ron Perelman quits Carnegie Hall board. The financier announced his resignation, effective next month, following ongoing battles with Carnegie Hall leaders. Perelman says the hall lacks transparency in operations, and the process of approving third-party transactions is lacking. Wall Street Journal</p> <p>FIFA exec suspended. Jerome Valcke, the second highest ranking FIFA official, is on leave while under investigation for corruption. Valcke may be tied to the black-market sale of World Cup tickets. New York Times (paywall)</p> <p>Florida woman arrested for weapons warehouse. Nikole Dykema reportedly had at least 3,714 bladed weapons, including machetes and hatches, in a house. The 47-year-old woman also booby trapped the home and yard. It's not clear why Dykema had the weapons, but she was arrested for a parole violation. CNN</p> <p>The military in Burkina Faso has staged a coup. Just days before the general elections, the military has seized the President and Prime Minister and declared military rule. An official called out the leaders of the West African nation as a "deviant transitional regime." Ex-general and former presidential advisor Gilbert Diendere has been declared the new leader. CNN</p> <p>Housing starts edge lower in August; stocks edge higher. Starts fell to 1.126 million, 3% below the July level which were revised downward along with June. Housing is recovering, but is still well below the norm. Stocks climbed after the report -- could there be some traders hoping the disappointing numbers will thwart a rate hike?</p> <p>Carly Fiorina shines in raucus Republican debate. The former Hewlett-Packard CEO appeared to rattle the usually unflappable Donald Trump, the frontrunner. The other nine Republican challengers chipped away at Trump, chastising him for his personal insults and questioning his ability to stand on the world stage. CNBC</p> <p>&nbsp;</p> <p>Japan upper house OKs defence bills amid chaos. A panel in Japan's upper house on Thursday approved legislation for a security policy shift that would allow troops to fight abroad for the first time since World War Two, a ruling party lawmaker said. Opposition lawmakers tried to physically prevent the vote in a chaotic scene carried live on national television. The legislation has sparked huge protests from ordinary voters. Channel News Asia</p> <p>Chile coast rocked by 8.3 magnitude quake. At least five people were killed and 1 million </p>
Vanguard says the Fed risks 'being held captive to the markets' by inaction
Asset Management
<p>Editor's note: This is a statement from Vanguard's senior economist, Roger Aliaga-Diaz on the decision by the Federal Reserve to keep interest rates at zero.<br /> The Fed's decision to hold off on a rate increase is a clear indication to the markets that this rate cycle will be different, with international conditions and US dollar strength weighing more on the decision than in the past. We are concerned with the Fed's acknowledgement of recent market volatility in its decision. The Fed runs the risk of being held captive to the markets, as, paradoxically, much of that volatility is due to the anticipation and uncertainty around when the Fed will move.</p> <p>Vanguard believes that focus should remain on how the Fed proceeds after the initial increase in rates. Given current conditions, we believe a take-off in 2015 is warranted and continue to stress our view of low and slow. The US economy remains strong relative to global peers, and we expect that resiliency to remain.<br /> Photo: Brookings Institute</p>
Traders react to Fed decision: Just watch what Yellen does to the VIX
Lifestyle, 4:01
<p>Traders react to news that the Federal Reserve is leaving interest rates at zero percent.<br /> LOL. VIX down 8% "@Henry_Chinaski: $SPY $VIX $VXX $UVXY this pic doesn't get old"</p> <p>— StockTwits (@StockTwits) Sep. 17 at 02:28 PM</p>
Daily Scan: Military coup takes Burkina Faso; Fed decision looming
Capital Markets
<p>September 17</p> <p>Good afternoon. It's D-Day in Washington, D.C. The voting members of the Federal Reserve's policy-making committee will announce whether they will stand pat on interest rates or raise them. For the past week, virtually every move in the market has been ascribed to traders waiting for this moment. There's plenty of data to support a hike as well as data to support continued allegiance to Zirp -- zero interest rate policy. What's your thought? Is the U.S. economy robust enough to handle a 25 basis point rate hike? Job formation is solid but consumer prices fell in August. FedEx had surprisingly weak earnings and China has a cold that is infecting the economy globally. What say you? Policy announcement lands at 2 p.m. ET; presser with Fed Chair Janet Yellen at 2:30 p.m. ET. In the mean time, stocks are tentatively looking up. Ish. The Dow gained 0.14% Thursday morning, the Nasdaq was up 0.37%, and the S&amp;P 500 climbed 0.21%.</p> <p>Here's what else you need to know:</p> <p>The military in Burkina Faso has staged a coup. Just days before the general elections, the military has seized the President and Prime Minister and declared military rule. An official called out the leaders of the West African nation as a "deviant transitional regime." Ex-general and former presidential advisor Gilbert Diendere has been declared the new leader. CNN</p> <p>Housing starts edge lower in August; stocks edge higher. Starts fell to 1.126 million, 3% below the July level which were revised downward along with June. Housing is recovering, but is still well below the norm. Stocks climbed after the report -- could there be some traders hoping the disappointing numbers will thwart a rate hike?</p> <p>Carly Fiorina shines in raucus Republican debate. The former Hewlett-Packard CEO appeared to rattle the usually unflappable Donald Trump, the frontrunner. The other nine Republican challengers chipped away at Trump, chastising him for his personal insults and questioning his ability to stand on the world stage. CNBC</p> <p>Altice to buy Cablevision in $17.7 billion deal. The European telecoms group has been growing rapidly through acquisition, led by Patrick Dahi, the French-Israeli billionaire. Drahi has been negotiating with the fourth largest cable operator to expand Altice's presence in the U.S. Reuters</p> <p>Swiss central bank leaves rates at -0.75%. The economy is still struggling and the Swiss franc remains stubbornly strong vs the Euro -- even though the central bank removed the trading cap on the currency earlier in the year.</p> <p>Don't even bother showing up in the morning.  The mainland markets in China wiped out most gains in the last hour of trading.  The Shanghai Composite slid 2.1% following its best trading session in weeks. Hong Kong’s Hang Seng Index retraced gains, ending the day 0.53% lower. The Nikkei 225 bucked the trend rising 1.43% despite</p> <p>Japan upper house OKs defence bills amid chaos. A panel in Japan's upper house on Thursday approved legislation for a security policy shift that would allow troops to fight abroad for the first time since World War Two, a ruling party lawmaker said. Opposition lawmakers tried to physically prevent the vote in a chaotic scene carried live on national television. The legislation has sparked huge protests from ordinary voters. </p>
HSBC becomes HSBC UK in ‘radical’ rebranding
Lifestyle, 4:01
<p>After more than а month-long review on a potential name change, the UK’s largest lender has decided to keep ‘HSBC’ in its domestic banking division brand, Finbuzz reports. </p> <p>An internal staff email last week said of the change: “It soon became obvious that everyone preferred a name that maintains a strong connection to HSBC, and a clear commitment to the UK.”</p> <p>HSBC, also Europe’s largest bank, announced plans to rebrand earlier this summer. The announcement had the chatting classes speculating whether or not HSBC would revive its Midland Bank brand which it acquired in 1992.</p> <p>One legacy of Midland Bank that HSBC UK will adopt is location, as the 26,000 banking employees will be based in Birmingham, the former Midland Bank centre. The HSBC UK name comes into effect from 1 January 2018, and will be used at the bank’s 1000 UK branch locations.</p> <p>The name change comes ahead of the new banking rule that requires lenders to ‘ring-fence’, or separate, high-street and investment banking operations. “[Setting] up the UK ring-fenced bank in Birmingham is a key strategic action for the group,” Gulliver said.</p> <p>“Our ambition is to be the bank of choice in the UK and as a name, HSBC UK will build on the global connectivity and customer trust of the HSBC brand and differentiate us in a competitive market.”</p> <p>This article originally appeared on Finbuzz.<br /> Photo: Elliott Brown</p>
Don’t sweat the Fed
Asset Management
<p>This should be short. There are a lot of good reasons not to worry about the FOMC raising Fed funds or not. If they raise Fed funds:</p> <p> First, savers deserve a return. Economies work better when savers get rewarded.<br /> Second, investors do better on the whole when there is a risk free asset earning something to allocate money to, because otherwise investors take too much risk in an effort to generate income.<br /> Third, the FOMC should never have let Fed funds rates go below 1% anyway — the marginal stimulus is limited once the yield curve gets slope enough for the banks to lend. They don't really need more than that.<br /> Fourth, it's not as if monetary policy has been doing that much. Outside of the government and corporations, most entities have not shown a lot of desire to lever up after the financial crisis.<br /> Fifth, long Treasury yields will do what they want to do — they won't necessarily go up… it all depends on how strong the economy is.</p> <p>But if the the Fed doesn't raise Fed funds, no big deal. We wait a little longer. What's the difference between having zero interest rates for 6.5 years and 7.5 years? Either one would build up enough leverage if the economy had the oomph to absorb it.</p> <p>As it is, corporate borrowing has been the major place of debt expansion through both loans and bonds. Watch the debt of energy firms that are allergic to low crude oil prices. Honorable mention goes to auto, student, and agricultural lending. May as well mention that underwriting standards are slipping in some areas for consumers, but things aren't nuts yet.<br /> I've often said that the FOMC stops tightening rates when something big blows up. Can't see what it will be this time — the energy sector will be hurt, but it isn't big enough to impair financials as a group. Subprime lending is light at present outside of autos.<br /> Watch and see, but in my opinion, it is a sideshow. Watch how the long end behaves, and see if the market reflates. We need more confusion and less concern over what the next crisis is, before any significant crisis comes.</p> <p>This story originally appeared on ValueWalk.<br /> Photo: Maritime Haftek</p>
Oppenheimer analysts met with GoPro management; here's what happened
Capital Markets
<p> Shares of GoPro Inc (NASDAQ: GPRO) touched new all-time lows of $31.32 last week.</p> <p> Andrew Uerkwitz of Oppenheimer met with GoPro's management team and the overall tone was "upbeat."<br /> Uerkwitz maintained a Perform rating (no assigned price target) due to his "more conservative" view of the segment.</p> <p>Andrew Uerkwitz of Oppenheimer recently met with GoPro's Chief Financial Officer Jack Lazar and VP of Corporate Development Colin Born.</p> <p>According to Uerkwitz, the overall tone of the meeting was "upbeat," as management was "positive" on GoPro's market position and opportunity. Specifically, the Hero4 Session is expected to be the company's "most prominent" piece of new hardware for 2014 given its ...</p> <p>Read the full story available on Benzinga.com.</p> <p> Photo: Keegan Slattery<br /> &nbsp;</p>
IBM gets behind the blockchain
FinTech
<p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>While bitcoin and other cryptocurrencies have struggled to find mainstream appeal, blockchain, the ledger like technology that they run on, has been touted as one of the most important technological advancements of the past decade. The system has the ability to facilitate transactions in a way that many say will transform more than just the financial industry.</p> <p>That idea is now being put into practice by tech giant International Business Machines Corp. (NYSE: IBM), as ...</p> <p>Read the full story on Benzinga.com.<br /> Photo: Kansir</p>
Oil, China pulls Kynikos deep into the black
Hedge Funds
<p>The past few years have been nothing short of brutal for the short-only hedge fund space. QE3 was launched in September 2012, equities went through the roof, and the market has never looked back since. HFR data shows that from 2012 to 2014, short-only funds lost an average of 35%, a stark contrast to the S&amp;P’s over 75% gain in the same period.</p> <p>Thankfully however, 2015’s a little different – especially for Jim Chanos’ crew at 22 West 55th Street.</p> <p>After losing money since 2012, Jim Chanos’ Kynikos Associates is now firmly in the black according to the Wall Street Journal, and it didn’t just creep there either, no, it actually posted some respectable gains in August alone:<br /> The Ursus and Kriticos funds, which bet only against stocks, gained 6.2% and 8.2% in August, according to the document.<br /> The fund’s returns were mostly driven by bets against energy prices and – you guessed it – China, though the former did drive most of the gains, according to someone familiar with the matter.</p> <p>Still, the returns are tiny compared to Kynikos’ glory years. In 2008, when vaunted hedge funds such as Tudor and SAC chalked up their first ever losses, the firm’s Ursus fund surged 62%. And let’s not forget Chanos’ epic Enron short back in 2001.</p> <p>They still have more than enough reason to cheer up though. Recent Preqin analysis shows that hedge funds overall slipped 1.88% in August, exacerbating a 0.45% fall in July, and took the industry’s returns down to 1.96% year to date. And besides, as Chanos said two months ago regarding China, “The story has yet to play out…As long as China adds credit faster than its growth, the real story is months and years ahead.” I’m sure he’ll be there when that happens.<br /> Photo: Insider Monkey</p>
Full stack fintech: Will finance have its Uber moment?
FinTech
<p>In the world of fintech startups there is an important distinction to be considered: Is a business full stack and partial stack?</p> <p>The distinction is important because the emergence of full-stack startups could be the biggest threat to industry incumbents. Unsurprisingly, banks are so far throwing most of their  support behind partial stack fintech startups.</p> <p>In his blog,  Andreessen Horowitz and general partner Chris Dixon predicts a full-stack movement in the fintech space, similar what has been seen  in other sectors. But so far fintech start-ups are predominantly partial stack: taking new technologies and then selling or licensing them to big banks.</p> <p>The new approach is to offer an end-to-end solution, cutting out existing players. This is full stack. Think about what Uber has done to taxis, Netflix to cable, or what Tesla is on the verge of doing to the motor industry.</p> <p> If a fintech start-up can pull off a full stack solution, it is hard to replace. That said, the barrier to entry is high and the startup would need to be good at many different things - from software and hardware, to marketing and logistics - to make it a success.</p> <p>If there is a movement in this direction though, the banks should be nervous.<br /> Photo: me and the sysop</p>