The Elite have invested billions of dollars over a period of 60 years to create a population of semi-conscious happy consumers in the US (and are attempting to do so globally). The form changes from time to time, but the essence is the same: don'...
The CFTC said VTB Bank and VTB Capital cooperated with the U.S. investigation.
OPEN A FOREX ACCOUNT - YOU JUST MIGHT GET LUCKY
Jens Nordvig, one of the hottest prognosticators in finance, will sell anyone his secret sauce for winning trades for $30,000 a year.
But if you want unfettered access to his best ideas and personal touch—the kind that the deep-pocketed hedge funds covet—be prepared to shell out about 20 times more.
That two-pronged approach to research, off-limits (at least officially) at Wall Street banks, captures one of the most striking shifts in finance today: the rise of a class system where entire businesses cater to only the highest-paying clients. Of course, haves and have-nots have long existed in the world of finance. But the widening gap within Wall Street itself, between what the privileged few and most others get, is creating a new financial elite—what amounts to the 1 percent of the 1 percent.
And if you’re not part of the 0.01 percent, the next best thing is to sell to it.
“Investors either get personalized advice from someone they really trust, or it’s the data tools, good robots—and the price of those two things are different,” the 42-year-old Dane explained from his WeWork office in Manhattan’s Flatiron district one recent afternoon.
For Nordvig, who left Nomura Holdings Inc. in January after five years as Wall Street’s top-ranked currency strategist, it meant leveraging that standing to build his firm, Exante Data, around a rarefied group of the brightest hedge-fund names— and the money they dole out.
Exante counts Key Square, founded by George Soros protege Scott Bessent, and Adam Levinson’s Graticule, a Singapore-based firm spun out of Fortress Investment Group, among its clients, according to conversations with investors and people familiar with the matter. Graticule didn’t reply to requests for comment.
Nordvig declined to identify specific firms, but says there are just “five to seven” large institutions, whose fees covered most of his startup costs. And by design, he isn’t accepting any new business. That’s because while Exante’s six employees are focused on its analytics rollout, Nordvig devotes the majority of his time advising his marquee customers.
He’s in touch with them on an almost daily basis and is just a phone call or instant message away—any time, 24/7. His research is tailor-made to suit each one’s needs and Nordvig says he’ll often spend hours at a time with a single firm debating macroeconomic policy and trade strategies.
In late July, Nordvig was up until midnight defending his high-stakes call to a hedge-fund client in Asia that the Bank of Japan would stand pat, rather than announce a new set of aggressive stimulus measures as everyone expected. (He dissuaded the firm from shorting the yen, which proved to be prescient as the Japanese currency surged following the non-event.)
“At banks, it’s mass production. It’s Target versus Hermès.”
So far, his backers like what they see.
“Jens is one of the great thinkers in the market,” said Key Square’s Bessent, who oversaw Soros’ personal fortune before starting his own billion-dollar macro fund this year. “Part of what we did was we got him to control his number of clients. At banks, it’s mass production. It’s Target versus Hermès.”
Nordvig isn’t shy about what he brings to the table. Prior to his years at Nomura, he spent almost a decade at Goldman Sachs Group Inc., where he rose to become co-head of global currency research and made his name with bold calls and savvy analysis. In between, he did a brief stint at Ray Dalio’s Bridgewater Associates. And Nordvig brushes off the perception among both admirers and critics that he can, at times, be just a bit too brazen in promoting himself. To him, it’s just part of the cutthroat nature of finance.
“I have a track record of being quite detail-oriented, precise in my analysis and also able to develop new frameworks for thinking about things, and at the same time being quite pragmatic,” he said. “I’ve set up the advisory business so that the people I deal with are some of the biggest macro investors in the world, and I know their interests fit with how I think.”
Whatever the case, there is little doubt the appetite for bespoke research like Nordvig’s is growing. Banks are slashing costs, cutting jobs and abandoning their ambitions to be all things to all customers in the face of a slew of regulations over issues like selective access and excessive risk-taking. An industry-wide slump in revenue since the financial crisis has also prompted bank executives to rethink the value of the commission-based model, where investment research is offered for free in return for trade orders.
Many firms have eliminated analysts as they scale back research spending—making personalized service and attention all the more valuable. Some like Citigroup Inc. and Morgan Stanley have drawn up preferred client lists with code names such as “Focus Five” and “supercore” for top clients.
“It’s a changing landscape,” said Matthew Feldmann, a consultant at Scepter Partners, a multi-family office, and a former money manager at Citadel and Brevan Howard. “People like Jens have found a niche area where all you need is a few wealthy individual customers.”
Perhaps just as important is the proliferation of automated trading strategies and machine-driven data mining, which has replaced many traditional roles that used to exist on Wall Street (not to mention made it harder for hedge funds to outperform as technology makes financial data almost ubiquitous).
Nordvig’s old job at Goldman Sachs exemplified that bygone era. As recently as 2007, he’d stand in the middle of the trading floor with mic in hand on the first Friday of every month, just before the 8:30 a.m. payrolls report. His task? Shout out his immediate take. If the U.S. added more jobs than expected, he’d cry “buy dollar-yen!” and within seconds, Goldman Sachs’s traders would hit the button on their keyboards to put in the order.
“We used to be able to make so much money by just being fast,” he said. Yet today, it’s all done by robots.
Amid the upheaval, Nordvig is confident his experience and smarts will ensure his high-priced advice remains in demand. But he’s not taking any chances.
After years of lackluster returns and faced with the biggest withdrawals since the financial crisis, hedge funds are looking for any edge they can find. These days, that often comes from the world of quantitative analysis. Even legendary names like Paul Tudor Jones, who made their fortunes the old-fashioned way, are hiring a bevy of programmers and mathematicians to build out more sophisticated, computer-driven strategies.
But not everybody has the research budgets to hire scores of Ph.D.s or pay for Nordvig’s white-glove service. That’s where the “data” in Exante Data comes in (Exante is derived from “ex ante,” Latin for “before the event”). Plenty of research superstars have decamped from Wall Street to set up boutique advisory firms, but Exante’s two-tier model is rare. Once the data business is fully up and running, Nordvig promises to give mere mortals on Wall Street the same type of data-mining tools once available only to the biggest quant shops.
Nordvig says he has one overriding advantage: he simply understands markets better.
Yet competition on the data front is heating up. Scores of startups are already scraping data and turning the information into actionable ideas. Goldman Sachs is the biggest investor in Kensho Technologies Inc., which analyzes historical trading patterns to predict how assets react to events like policy meetings and economic releases. An outfit called SpaceKnow Inc. uses satellite images of factories to gauge economic activity in export-oriented countries like China.
Nordvig, in his typical cocksure manner, says he has one overriding advantage: he simply understands markets better.
In coming months, Exante will launch its first data product for the masses. According to Nordvig, his data scientists have come up with a complex algorithm that precisely estimates how much the yuan exchange rate is influenced by China’s buying or selling of dollars, on a daily basis.
There’s nothing publicly available that comes close to measuring intervention in such detail. But Nordvig says his algo succeeds because it can capture anomalies in yuan trading, like a sudden widening in bid-ask spreads, and then compare the data against freely-traded markets in big financial centers.
While the tool can’t yet gauge intervention in offshore yuan and currency forwards, his backtested results show it closely tracks less frequently released official figures. And knowing beforehand can make a huge difference. Case in point: In August 2015, the People’s Bank of China unexpectedly engineered a weakening of the yuan, which blindsided investors and sent financial markets worldwide into a tailspin.
“This is about knowing what topics are important to the clients you serve,” Nordvig said.
Today only, get Splitting Pennies on Kindle for .99 on Amazon!
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We see from time to time articles from investment groups talking about how they believe that the US Dollar will be strong for the next 18 months blah blah blah. It's always positive to hear investment managers learning about FX. Unfortunate...
Forty-eight percent of nonfinancial companies listed on U.S. stock exchanges remained exposed to volatility in foreign exchange rates, commodity prices and interest rates in 2012 because they did not hedge them, according to a new study by Chatham Financial. The interest-rate and currency risk adviser studied a sample of 1,075 companies ranging from $500 million to $20 billion in revenue. The nearly half that did not use financial instruments to hedge their exposures demurred despite the threat the risks posed to both the balance sheets and reported earnings (see chart at bottom). “That was surprising, knowing the pressure senior management teams and treasury feel around identifying ways to reduce risk to factors within their control so business can focus on other areas,”Amol Dhargalkar, managing director for corporate advisory at Chatham, says.
Companies that do business outside of the USA have substantial forex exposure. This exposure can be an asset, if properly managed - but often it is a liability. Recently, the trend in corporate accounting has been to blame "currency headwinds" which can be a good excuse for up to $10 billion in losses. Did these executives ever hear about hedging?
When a publicly held company engaged in a multi-billion dollar investment in an overseas location
recently, the firm considered using a hedge — or swap — contract to reduce the risk that a big currency
swing would impact costs and financial results. The plan was sound financially. Yet, management had
concerns about the reaction of investors to this approach and decided to drop the hedging plan, says
Chris Rhodes, accounting advisory services partner at PricewaterhouseCoopers (PwC). Why? Because the CFO determined that,
although the hedge would protect all the cash
spent in the foreign jurisdiction against currency
exposure, the cost of capital — in this case
borrowing in external markets — “would be
negatively impacted by the inability of some
analysts to understand the reporting issues
involved,” Rhodes explains. “The concern is that,
although many analysts would immediately grasp
the sophisticated currency-hedging procedures
that were key to the plan, others might not.”
Cost-efficient trading: No mark-up fee, no transportation or insurance costs such as those incurred when purchasing physical gold. Only the standard transaction fees that are charged for on-exchange securities trading are payable at the time of acquisition. The spreads that apply to purchase and sale correspond to the standard conditions on the global market and are considerably lower than those for traditional gold-based financial products. Furthermore, management or administration fees relating to Xetra-Gold are not incurred. The investor pays the amount of custody fees which he/she has agreed upon with the depository bank.Physically backed: The issuer uses the proceeds from the issue of Xetra-Gold to purchase gold. The physical gold is held in custody for the issuer in the Frankfurt vaults of Clearstream Banking AG, a wholly-owned subsidiary of Deutsche Börse AG. In order to facilitate the delivery of physical gold, the issuer holds a further limited amount of gold on an unallocated weight account with Umicore AG & Co. KG.Transparent: Xetra-Gold tracks the price of gold on a virtually 1:1 basis, and is always up to date.Tradeable in euros per gram: While in the past, gold was mainly denominated in US dollars per troy ounce, you trade Xetra-Gold in euros per gram.Stable/Constant holdings: The investor’s right to receive delivery of the certificated amount of gold is not reduced by management costs or other fees, unlike other investments in gold. 1,000 units of Xetra-Gold will still represent a kilogram of gold in 30 years' time.
Redemption for gold: Investors always have the possibility of demanding delivery of the securitised amount of gold per bearer note against the issuer. If the investor is not able to exercise this right due to legal restrictions effective for him/her, he/she can demand the cashing of Xetra-Gold from the issuer. In this case, a settlement fee of EUR 0.02 per Xetra-Gold bond will be charged.Delivery of gold: If an investor asserts his/her right to the delivery of the certificated volume of gold from the issuer, the gold will be transported to the respective point of delivery by Umicore AG & Co. KG, which is responsible for all physical delivery processes. The issuer will also have delivery rights of gold from Umicore AG & Co. KG, as the gold leaf debtor. Investors can find information on delivery and the alternative payment claims that are relevant for investment and insurance companies in the PDF document entitled 'Information on the process for exercising Xetra-Gold'.
Among all exchange-traded commodities (ETCs) tradable on Xetra, Xetra-Gold is by far the most successful in terms of turnover. During the first seven months of the year, order book turnover on Xetra stood at approximately €1.5 billion. The assets managed by Xetra-Gold currently amount to €3.5 billion.In September 2015, the German Federal Fiscal Court (Bundesfinanzhof) had ruled that after a minimum holding period, any profits from the sale or redemption of Xetra-Gold are not subject to the capital gains tax. From a fiscal point of view, the purchase, redemption or sale are thus to be treated equal to a direct purchase or sale of physical gold, such as in bullions or coins.
Step-by-step description of exerciseTogether with a representative of his principal bank, the investor creates the transaction and sends it to the principal bank's custodian with the relevant process data described above. The custodian in turn instructs its custodian, stipulating all process-relevant data, until a bank which is a customer of Clearstream Banking is authorised.The customer may use the attached exercise form to instruct the designated sponsor (here Deutsche Bank AG, Frankfurt) to deliver a specified number of gold bars to the point of delivery. The process is similar to that for the delivery of physical certificates.The customer should send the original exercise form to the following address:Deutsche Bank AG
"Ausübung Xetra-Gold" CIB-Global Banking
Trust & Securities Services
Grosse Gallusstrasse 10 – 14
60311 Frankfurt am Main
GermanyTo transfer the required amount of Xetra-Gold units to the blocked account of Deutsche Börse Commodities, the customer should also place an FoP instruction via CASCADE or File Transfer/SWIFT.Delivery will be initiated if Deutsche Bank receives the securities and the application form by 10:00 CET. As a rule it takes one to two weeks to deliver retail gold bars and four days for London Good Delivery gold bars from date of ordering. As soon as the delivered gold arrives at the point of delivery, the Xetra-Gold® units are removed and recovered from the "Ausübungskonto DBCo" (DBCo exercise account).Due to the provisions of the Money Laundering Act (Geldwäschegesetz) only the branch of a bank may be used as point of delivery. Investors expecting a large delivery of gold should contact their principal bank to discuss the transfer of the gold to the point of delivery.
“Anyone with a nickel, black or white, could now drink the cocaine-infused beverage. Middle-class whites worried that soft drinks were contributing to what they saw as exploding cocaine use among African-Americans. Southern newspapers reported that ‘negro cocaine fiends’ were raping white women, the police powerless to stop them.”
Global Supply Chains Paralyzed After World’s 7th Largest Container Shipper Files Bankruptcy, Assets Frozen
Hanjin Shipping is Korea's largest and one of the world’s top ten container carriers that operates some 70 liner and tramper services around the globe transporting over 100 million tons of cargo annually. Its fleet consists of some 150 containerships and bulk carriers.With 4 regional headquarters in the U.S., Europe, Asia and South East & West Asia, approximately 5,000 global staffs as well as container terminals in world’s major ports contribute to Hanjin Shipping’s world-class logistics network around the world.
at a court in Seoul, South Korea, August 31, 2016.
"The state within a state is hiding mostly in plain sight.The pressure to conform to an authority figure or peer group can cause people to behave in shocking ways.It is not too much to say that Wall Street may be the ultimate owner of the Deep State and its strategies, if for no other reason than that it has the money to reward government operatives with a second career that is lucrative beyond the dreams of avarice - certainly beyond the dreams of a salaried government employee.The corridor between Manhattan and Washington is a well-trodden highway for the personalities we have all gotten to know in the period since the massive deregulation of Wall Street."-Mike Lofgren
The probability is that an insider provided the data.I say this because the NSA net is a closed net that is continuously encrypted. Which would mean, that if someone wanted to hack into the NSA network they would not only have to know weaknesses in the network/firewalls/tables and passwords but also be able to penetrate the encryption.So, my bet is that it is an insider. In my opinion, if the Russians had these files, they would use them not leak them or any part of them to the world.
If Russia had stolen the hacking tools, it would be senseless to publicize the theft, let alone put them up for sale. It would be like a safecracker stealing the combination to a bank vault and putting it on Facebook. Once revealed, companies and governments would patch their firewalls, just as the bank would change its combination.A more logical explanation could also be insider theft. If that’s the case, it’s one more reason to question the usefulness of an agency that secretly collects private information on millions of Americans but can’t keep its most valuable data from being stolen, or as it appears in this case, being used against us.***The reasons given for laying the blame on Russia appear less convincing, however. “This is probably some Russian mind game, down to the bogus accent,” James A. Lewis, a computer expert at the Center for Strategic and International Studies, a Washington think tank, told the New York Times. Why the Russians would engage in such a mind game, he never explained.Rather than the NSA hacking tools being snatched as a result of a sophisticated cyber operation by Russia or some other nation, it seems more likely that an employee stole them. Experts who have analyzed the files suspect that they date to October 2013, five months after Edward Snowden left his contractor position with the NSA and fled to Hong Kong carrying flash drives containing hundreds of thousands of pages of NSA documents.So, if Snowden could not have stolen the hacking tools, there are indications that after he departed in May 2013, someone else did, possibly someone assigned to the agency’s highly sensitive Tailored Access Operations.In December 2013, another highly secret NSA document quietly became public. It was a top secret TAO catalog of NSA hacking tools. Known as the Advanced Network Technology (ANT) catalog, it consisted of 50 pages of extensive pictures, diagrams and descriptions of tools for every kind of hack, mostly targeted at devices manufactured by U.S. companies, including Apple, Cisco, Dell and many others.Like the hacking tools, the catalog used similar codenames.***In 2014, I spent three days in Moscow with Snowden for a magazine assignment and a PBS documentary. During our on-the-record conversations, he would not talk about the ANT catalog, perhaps not wanting to bring attention to another possible NSA whistleblower.I was, however, given unrestricted access to his cache of documents. These included both the entire British, or GCHQ, files and the entire NSA files.But going through this archive using a sophisticated digital search tool, I could not find a single reference to the ANT catalog. This confirmed for me that it had likely been released by a second leaker. And if that person could have downloaded and removed the catalog of hacking tools, it’s also likely he or she could have also downloaded and removed the digital tools now being leaked.
“My colleagues and I are fairly certain that this was no hack, or group for that matter,” the former NSA employee told Motherboard. “This ‘Shadow Brokers’ character is one guy, an insider employee.”The source, who asked to remain anonymous, said that it’d be much easier for an insider to obtain the data that The Shadow Brokers put online rather than someone else, even Russia, remotely stealing it. He argued that “naming convention of the file directories, as well as some of the scripts in the dump are only accessible internally,” and that “there is no reason” for those files to be on a server someone could hack. He claimed that these sorts of files are on a physically separated network that doesn’t touch the internet; an air-gap.***“We are 99.9 percent sure that Russia has nothing to do with this and even though all this speculation is more sensational in the media, the insider theory should not be dismissed,” the source added. “We think it is the most plausible.”***Another former NSA source, who was contacted independently and spoke on condition of anonymity, said that “it’s plausible” that the leakers are actually a disgruntled insider, claiming that it’s easier to walk out of the NSA with a USB drive or a CD than hack its servers.Michael Adams, an information security expert who served more than two decades in the US Special Operations Command, agreed that it’s a viable theory.“It’s Snowden junior,” Adams told Motherboard. “Except he doesn’t want to end up in virtual prison in Russia. He’s smart enough to rip off shit, but also smart enough to be unidentifiable.”
UBS, Deutsche Bank, Santander and BNY Mellon have partnered up to create a new digital currency to facilitate intra-bank settlements, the FT reports. The cryptocurrency will use blockchain technology underpinning the Bitcoin.
If implemented, the new cryptocurrency would be the first to be used officially between major financial institutions. The concept resembles the IMF’s Special Drawing Right (SDR), introduced in 1964. Based on a basket of currencies (the US dollar, euro, the Japanese yen, pound sterling and the soon to be joined Chinese yuan this October), it is used to supplement the IMF’s member countries’ official reserve. As of March 2016, 204.1 billion SDRs equivalent to about $285 billion had been created and allocated to countries.
Citi Research released a 56-page report on bitcoin saying that it is not going to disrupt banks or credit card networks. It says there will be increased transaction costs for bitcoin to provide increased volume. As for the use of bitcoin in remittance payments, it says bitcoin’s advantage dissipates when the “last mile” cost of converting to fiat currency is considered. The report notes the growth of bitcoin mobile apps in developing countries but sees regulations rising that put them in question. It claims existing payment systems are generally efficient. The report also talks about Ripple and Ethereum as well as government-backed digital currencies. There is also an extensive summary of bitcoin’s legal status in different countries.
One of those resources is the real-time gross settlement (RTGS) system used by central banks (it's typically reserved for high-value transactions that need to be settled instantly), and the other is central bank-issued cash. Using the Utility Settlement Coin (USC) unveiled today, the five-member consortium that has sprung up around the project aims to help central banks open-up access to these tools to more customers. If successful, USC has the potential to create entirely new business models built on instant settling and easy cash transfers. In interview, Robert Sams, founder of London-based Clearmatics, said his firm initially worked with UBS to build the network, and that BNY Mellon, Deutsche Bank, ICAP and Santander are only just the first of many future members. "Cash is a leg to almost every trade," said Sams, who previously worked for nine years as a derivatives trader with Sanctum FI, also in London. "In order to get most of the benefits of a distributed ledger in settlement, there has to be cash on a distributed ledger rail." How transactions might be processed, and who will own the nodes, has also not been shared. But what we do know based on a statement from the company is that Clearmatics described the USC as "a series of cash assets" for currencies, including US dollars, euros, British pounds and Swiss francs.
Risk assets are now supported by the new ”Keynesian Put”, the expectation that fiscal measures will be deployed to combat any renewed weakness in the economy/markets (independently of any larger political projects). But asset prices remain primarily supported by excess monetary abundance across the world:
- There have been 667 interest rate cuts by global central banks since Lehman;
- G7 central bank governors Yellen, Kuroda, Draghi, Carney & Poloz have been in their current posts for a collective 17 years, yet only one (Yellen in Dec’15) has actually hiked interest rates during this time;
- Central banks own $25tn of financial assets (a sum larger than GDP of US + Japan, and up $12tn since Lehman);
- There are currently $12.3tn of negative yielding global bonds (28% of total);
- There is currently $8tn of negative yielding sovereign debt (54% of total).