http://bloomberg.com/apps/news?pid=20601070&sid=aKPBxT0cjj5E
Sept. 24 (Bloomberg) -- Former Federal Reserve Chairman Paul Volcker criticized the Obama administration's plan to subject "systemically important" financial firms to more stringent regulation by the Fed.
Volcker told lawmakers today that such a designation would imply government readiness to support the firms in a crisis, encouraging even more risky behavior in a phenomenon known as "moral hazard."
FOMC Statement
Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010. As previously announced, the Federal Reserve's purchases of $300 billion of Treasury securities will be completed by the end of October 2009. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
http://www.frbatlanta.org/invoke.cfm?objectid=E83004B9-5056-9F12-126EED5322A86646&method=display
* 23 Sep 09: 00:52 GMT (SGA) - FX NOW! USD/JPY, EUR/JPY Flows - USD back up as market in hunt for stops, above 91.00
Markets in "stoploss hunting mode" - with USD/JPY stops below 90.80-90, and EUR stops/options above 1.4825 taken out - now the reverse is happening. Sell USD earlier on stops, now market players are buying back USD on short-squeeze in lack of fresh news. USD/JPY up at 90.89-90, up from 90.47-50 lows, eye stoploss above 91.00, the level where huge US investment, funds sellers started the morning sales. EUR/USD stops below 1.4780/ 1.4750 now as market now after running into good offers ahead of 1.4850 barriers after charging to 1-year highs of 1.4840-43 from 1.4800-10. EUR/JPY at 134.45-50, off its lows of 134.10-13, eye test of 135.00 on short-squeeze in USD/JPY again. WL
http://preview.collective2.com/pressreleases/C2_pr_20090804.pdf
Contact: Michael Robinson
510-428-2167
New York -- Aug. 4, 2009 -- In a sign of the continued flight of
investors from high-priced money managers to do-it-yourself Internet
investing, Collective2.com today announced that it facilitated a record
$3.6 billion in self-directed trades in June 2009, roughly a 10-fold
increase from the year before.
For the first six months of this year, the nominal value of financial
instruments traded through Collective2.com totaled $11.65 billion.
That compares with about $1.1 billion in the similar 2008 period. Also
during the period, registered users grew 25 percent to 32,000.
Collective2.com acts as an online repository for automated trading
systems. The site allows any investor with an Internet connection to
select from nearly 9,000 trading systems that have been developed
by mathematicians and traders from around the world. Once an
investor selects his systems, trades are automatically placed in the
customerʼs regular brokerage account.
A trading system is a set of formulas and rules that generate buy and sell
recommendations based on price, volume or other data. Collective2.com
trading systems cover stocks, options, futures and foreign exchange.
"Were seeing more investors flee from so-called professional money
managersʼ and decide they can do better, and pay less, while
maintaining complete control over their brokerage accounts," said
Matthew Klein, President of Collective2. "At Collective2, an investor
with only $10,000 can have access to the same high-end automated
trading strategies as a money manager running a $100 million
portfolio."
The Collective2 automated trading platform is completely transparent.
Funds remain in the customers brokerage account. The customer
alone selects which trading strategies are automated in his account
and can see, in real time, exactly which trades are being placed
NFA permanently bars True Vector Trading Group LLC and its principal
September 22, Chicago - National Futures Association (NFA) has permanently barred from NFA membership True Vector Trading Group LLC http://www.nfa.futures.org/basicnet/Details.aspx?entityid=0383441 (True Vector), an Introducing Broker formerly located in Delray Beach, Florida, and its principal James Douglas http://www.nfa.futures.org/basicnet/Details.aspx?entityid=0320266 of Galveston, Texas. The Decision, issued by NFA's Business Conduct Committee, is based on an NFA Complaint filed in June 2009.
The Committee found that True Vector and Douglas made misleading sales solicitations to customers and had the customers sign blank account opening documents which Douglas completed with inaccurate information. The Committee also found that True Vector and Douglas failed to adequately implement an anti-money laundering program and failed to supervise True Vector's employees in the conduct of their commodity futures activities.
http://www.nfa.futures.org/news/newsRel.asp?ArticleID=2357
For Immediate Release
For more information contact:
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org
NFA permanently bars Florida firm GlobeFX Club Inc.
September 21, Chicago - National Futures Association (NFA) has permanently barred GlobeFX Club Inc. (GlobeFX Club) from NFA membership. GlobeFX Club is a Commodity Pool Operator located in Homestead, Florida. The Decision, issued by NFA's Business Conduct Committee, is based on an NFA Complaint filed in June 2009.
The Committee found that GlobeFX Club provided false and misleading information to NFA and failed to cooperate in NFA's investigation of the firm's operations. In addition, the Committee found that GlobeFX Club failed to supervise the firm's forex activities.
In March 2009, NFA took an emergency enforcement action that suspended GlobeFX Club because NFA was unable to determine the nature of GlobeFX's business operations, the identities of its customers and the treatment of its customer funds. See previous press release.
The complete text of the Complaint and Decision can be found on NFA's website (http://www.nfa.futures.org).
NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.
For Immediate Release
For more information contact:
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org
NFA permanently bars Florida commodity trading advisor Capital Blu Management LLC
September 18, Chicago - National Futures Association (NFA) has permanently barred from NFA membership Capital Blu Management LLC (Capital Blu), a Commodity Trading Advisor located in Melbourne, Florida. The Decision, issued by NFA's Business Conduct Committee, is based on an NFA Complaint filed in June 2009.
The Committee found that Capital Blu failed to cooperate fully and promptly with NFA in its investigation of the firm's operations.
The Decision is one of a series of actions taken against Capital Blu. In September 2008, NFA issued a Member Responsibility Action (MRA) prompted by NFA's investigation which was based upon customer allegations that Capital Blu had provided false statements to customers and participants in the CBM FX Fund LP and possibly other pools. See previous press release.
Additionally in April 2009, the Commodity Futures Trading Commission (CFTC) filed an action in federal court in Florida charging Capital Blu along with other defendants with depositing customer funds into multiple Capital Blu bank accounts, which were commingled and misappropriated for personal use. The Court entered a temporary restraining order freezing their assets and prohibiting Capital Blu from destroying books and records. See narrative of the CFTC Action.
The complete text of the Complaint and Decision can be found on NFA's website (http://www.nfa.futures.org)
NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.
By Thomas R. Keene and Shannon D. Harrington
Sept. 21 (Bloomberg) -- Financial markets have grown too dependent on mathematicians who use models to anticipate price moves and need to start injecting "common sense" into the equation, said Paul Wilmott, a London-based author and quantitative finance instructor.
Wilmott has warned that so-called quants who use mathematics to forecast how markets will behave can overlook errors in the models, leading to flawed predictions. In a New York Times column July 28, Wilmott also said so-called high- frequency trading, where hedge funds and other firms use advanced computers to buy and sell thousands of shares a second, threatens to destabilize the market.
"There is too much mathematics in this business," Wilmott, author of "Paul Wilmott on Quantitative Finance," said in a Bloomberg Radio interview. "I just want people to stop and think for once. People just rush into these things without any thought for what the consequences might be."
Wilmott is the co-founder of the Certificate in Quantitative Finance, a six-month program founded in 2003 that stresses the "practical" application of math in finance and admitted 195 students in January.
"We explain to people how to think for themselves," said Wilmott, who also founded the Diploma in Mathematical Finance at Oxford University, according to his Web site. "People don't really question those assumptions enough. If the assumptions are wrong, then obviously the models and what follows can be wrong as well."
Reliance on computer models and trading using algorithmic formulas also has led to a shift in the types of people hired by Wall Street, he said.
"You go back 20 years, and people running finance, they were maybe history graduates," Wilmott said. Now, much of the industry is run by mathematicians, he said. "A lot of mathematicians do not have that common sense that the old guard had," he said.
To contact the reporter on this story: Thomas R. Keene in New York tkeene@bloomberg.net; Shannon D. Harrington in New York at sharrington6@bloomberg.net.
Last Updated: September 21, 2009 15:39 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=aD4y2TBuy4gQ
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Mr. Obama's Trade War
If President Obama thought he could pander to his domestic political base without any consequences abroad, he needs to think again. Beijing's response to the tire tariffs Mr. Obama announced late Friday evening is a warning that America's trading partners won't take protectionism lying down.
China's Ministry of Commerce announced Sunday that it will launch antidumping investigations against imported U.S. auto parts and chickens. The move is being interpreted as retaliation for Mr. Obama's imposition of a 35% tariff on cheap Chinese tires imported into the U.S. (Beijing denies a link.) Apparently Beijing wasn't mollified by the fact the tariff is less than the 55% domestic lobbies in the U.S. had sought. The Commerce Ministry also put out a strongly worded statement denouncing the tire tariffs and not-so-gently reminding Mr. Obama of the Group of 20 statements he has endorsed about the importance of resisting protectionism amid a world-wide slowdown.
On their own these measures won't mark dramatic protectionism. Many imports of U.S. poultry already face stiff limits stemming from a pre-existing trade dispute over a U.S. ban on some Chinese chickens. Beijing had already slapped duties on car parts during an earlier trade dispute, too.
Rather, the Chinese government may want to send a signal to discourage Mr. Obama from future protectionism. They have reason to worry. Unlike in normal antidumping cases, Mr. Obama can't plead that his tire decision was simply made by career bureaucrats following a standard rule book. The trade law he applied, Section 421, gives the President full discretion, and Mr. Obama signaled he's willing to use his discretion to pay back domestic political supporters like the United Steelworkers union that filed the tire case. And because Mr. Obama's decision sets a precedent for similar cases, Beijing has to worry it will face more protectionism in short order if it doesn't nip this trend in the bud now.
This kind of Chinese response was predictable, if the Obama Administration had cared to read the signs. As a political matter, Beijing can't afford to do nothing. The China Rubber Industry Association, a trade group, puts the potential cost to the Chinese economy of the U.S. tariffs at $1 billion and 100,000 lost Chinese jobs. The Commerce Ministry said yesterday it wants to discuss the issue with the U.S. at the World Trade Organization, but a formal WTO challenge would face an uphill climb. Section 421 was specifically allowed as part of China's agreement to join the WTO in 2001.
Plus, China has its own protectionist lobbies at home. "Chinese poultry companies have been struggling over the past couple of years amid bird flu and a flood of imports, and the financial crisis is making that worse," Ma Chuang of the China Animal Agriculture Association, told Bloomberg over the weekend. Tire tariffs from the world's traditional free-trade leader makes it harder for governments like China's to stand up to such pressure from their own domestic interests.
That doesn't make Beijing's apparent retaliation right, of course. Beijing could best claim the global economic leadership role it craves by resisting tit-for-tat protectionism and instead further reducing its own subsidies, trade protections and limits on foreign investment. That might be wishful thinking, but at a minimum it would be wise to drop these antidumping cases as soon as attention has shifted elsewhere.
The bigger lesson here is for Mr. Obama, though. He appears to have thought he could both appease his far-left antitrade supporters in the U.S. and paper over the resulting disagreements with America's trading partners. No such luck. Instead he ceded America's historical leadership on trade when he imposed the tire tariffs. Now China's weekend moves are offering a first sign of where this will end up if he doesn't rediscover the virtues of free trade soon.
Is this a looming trade war between the US and the world's largest holder of US debt? Or is it saber-rattling setting up the G-20 meeting in Pittsburgh
http://online.wsj.com/article/BT-CO-20090914-702705.html
European stock markets traded lower Monday, weighed down by fears of protectionism and a possible US/China trade war.
http://www.marketwatch.com/story/dollar-gives-up-early-gains-after-trade-war-fears-2009-09-14
By marketwatch The US dollar slides against major rivals in late morning, giving up a small lift amid rising US-China trade tensions
