Bernanke Says Economic Data May Mask Individual Suffering

Bernanke didn’t address the outlook for monetary policy or the economy, or expand on the Fed’s Aug. 1 statement. His remarks, focused on economic measurement, will be delivered via prerecorded video.

The 58-year-old Fed chief, a former Princeton professor, said economists should “increase the attention paid to microeconomic data, which better capture the diversity of experience across households and firms.” Also, researchers should “seek better and more-direct measurements of economic well-being, the ultimate objective of our policy decisions.”

He said interesting projects include the Organization for Economic Co-operation and Development’s Better Life Initiative, which aims at measuring quality of life in different countries, and the Gross National Happiness index compiled by Bhutan.

http://www.bloomberg.com/news/2012-08-06/bernanke-says-economic-data-may-mask-individual-suffering.html

EES: UUP: U.S. Dollar Long-Term Buy Of 2012

Since the Euro's existence, it has been debated by analysts that the U.S. Dollar is losing its place as the only reserve currency in the world. In other words, the age of U.S. Dollar hegemony was coming to an end. Central Banks such as Bank of Russia have started diversifying into reserve currencies other than the U.S. Dollar, most recently theAustralian Dollar. This is the effect of a global sentiment that the U.S. Dollar outlook is extremely bearish. A number of factors including low interest rates, a weakening U.S. economy, a perceived shift to emerging markets by multinational corporations, a rising China and India, and other factors, make the U.S. Dollar look weak-- especially with new choices such as the Euro (FXE), Chinese Renmimbi, and others.

http://seekingalpha.com/article/782881-uup-u-s-dollar-long-term-buy-of-2012

http://www.reddit.com/r/finance/comments/y1x8a/uup_us_dollar_longterm_buy_of_2012_seeking_alpha/

Knight Capital Group Inc. (KCG) trading algorithm error costs $440 Million, rattles markets

Knight Capital Group Inc. (KCG) has “all hands on deck” and is in close contact with clients and counterparties as it tries to weather trading errors that cost it $440 million, Chief Executive Officer Thomas Joyce said.

Joyce said it’s “hard to comment” on discussions with creditors as Knight stock extended a two-day plunge to 70 percent and the firm explored strategic and financial alternatives following a loss almost four times its annual profit. The problems were triggered by what Joyce called “a bug, but a large bug” in software as the company, one of the largest U.S. market makers, prepared to trade with a New York Stock Exchange program catering to individual investors.

http://www.bloomberg.com/news/2012-08-02/knight-has-all-hands-on-deck-after-440-million-bug.html

Knight Capital Group Inc. (KCG) said losses from yesterday’s trading breakdown are $440 million, almost quadruple its 2011 net income and more than some analysts had estimated, and the firm is exploring strategic and financial alternatives. Its stock has lost 66 percent in two days.

Knight said it will continue its trading and market-making today as it considers its options. Yesterday’s issue was related to the installation of trading software and resulted in the company sending “numerous erroneous orders,” the Jersey City, New Jersey-based firm said today. The stock tumbled 50 percent to $3.46 at 9:36 a.m. New York time today.

http://www.bloomberg.com/news/2012-08-02/knight-says-losses-from-trading-breakdown-are-440-million.html

http://www.zerohedge.com/news/art-cashin-wall-streets-eras-error

http://www.zerohedge.com/news/knight-ceo-comments-algo-failure-which-has-cost-him-70-his-market-hap-one-day

Asia's Rich fire their money managers, bankers

Clinton Ang, the grandson of a gunny- sack seller who emigrated last century from China to Singapore, oversees a fortune valued at almost $80 million for himself and three siblings.

That makes him a target for wealth managers in Singapore, the private-banking capital of Asia. Yet the 39-year-old managing director of Hock Tong Bee Pte, which evolved from his grandfather’s sacks and foodstuff supplier into a purveyor of $6,000 Grand Cru wines, has already fired two bankers and prefers mostly to manage the money himself.

“I am very open to private banks for their propositions, but I want them to be relevant,” said Ang, who’s cut the amount of his family’s money managed by professionals to less than 5 percent from 25 percent three years ago. “We felt we could do better ourselves.”

Disillusionment with investment products and returns has made Asian millionaires such as Ang take greater control of their wealth than rich Europeans. Managers at Credit Suisse Group AG (CSGN), Citigroup Inc. and other banks in Asia have full discretion over clients’ portfolios for just 4 percent of assets under management, according to a June report from Boston Consulting Group. That’s down from 7 percent in 2006. In Europe, it’s 23 percent, rising from 18 percent six years ago.

“Asia’s wealthy lost a lot of trust in their private banks and private bankers during the 2008 financial crisis,” said Peter Damisch, a Zurich-based BCG partner and managing director who co-authored the report.

http://www.bloomberg.com/news/2012-07-31/asian-millionaires-firing-bankers-take-control-of-wealth.html

At least three banks seen central to Libor rigging

(Reuters) - New details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks were heavily involved in rigging global benchmark interest rates.
http://www.reuters.com/article/2012/07/28/us-banking-libor-traders-idUSBRE86R03220120728

Krugman: What Draghi didn't do

Update: And this sounds like a “nein” from the Germans.

Actually, he hasn’t done anything, at least yet. But it’s now widely hoped that the ECB will start buying government bonds (although it’s not at all clear whether the Germans will allow this, particularly on a sufficient scale); this has caused a significant decline in Spanish interest rates from their peak.

Limiting interest rates on peripheral borrowing is, however, only part of what the euro needs. As I and others have been arguing for a long time, Europe also needs sufficiently high inflation over the next few years to make it possible for Spain etc. to regain competitiveness without devastating deflation. So have market expectations of inflation risen from their unworkably low levels of recent months? No:

This still looks unworkable.

http://krugman.blogs.nytimes.com/2012/07/28/what-draghi-didnt-do/

EES: NFA fines another Forex firm

As if the PFG situation (see previous articles here and here) wasn't enough, yesterday the NFA fined yet another Forex firm for:

... improperly canceling forex trades and removing profits from customer accounts, failing to timely report trade data and other required information to NFA, failing to observe high standards of commercial honor, failing to comply with NFA's Enhanced Supervisory Requirements and failing to keep accurate records.

http://seekingalpha.com/article/756731-nfa-fines-another-forex-firm

NFA issues $200,000 fine against New York forex firm Alpari US LLC

NFA issues $200,000 fine against New York forex firm Alpari US LLC

July 26, Chicago - National Futures Association (NFA) has ordered Alpari US LLC, a futures commission merchant and forex dealer Member located in New York City, to pay a $200,000 fine as a result of an NFA Complaint filed in June 2012 and a settlement offer submitted by Alpari and two of the firm's principals, Jermaine C. Harmon and Richard A. Lani.

The Decision, issued by NFA's Business Conduct Committee, found Alpari violated several NFA requirements, including improperly cancelling forex trades and removing profits from customer accounts, failing to timely report trade data and other required information to NFA, failing to observe high standards of commercial honor, failing to comply with NFA's Enhanced Supervisory Requirements and failing to keep accurate records. The Decision also found that Alpari - together with Harmon and Lani - failed to supervise.

In addition to the $200,000 fine, Alpari is required to refund within 30 days to customers losses they incurred as a result of the price adjustments that Alpari made to their accounts in connection with an October 2011 "market event." Alpari must also provide verification to NFA that these refunds were paid to and received by customers.

Alpari must also submit a written report to NFA within 180 days of the effective date of the Decision which documents the results of an independent review of Alpari's electronic trading platforms conducted by a qualified outside party and the steps Alpari has implemented to remedy deficiencies with the firm's internal controls.

Alpari, Harmon and Lani neither admitted nor denied the charges. The complete text of the Complaint and Decision are available onNFA's website.

http://www.nfa.futures.org/news/newsRel.asp?ArticleID=4087

U.S. big banks' glory days feared to be gone for good

* Low rates, more regulation depress profit outlook

* Banks show few fundamental signs of improvement in Q2

* Only choice for big banks may be to slim down

(Adds Sandy Weill comments)

By Jed Horowitz

NEW YORK, July 25 (Reuters) - The summer of 2012 may be remembered as the time when regulation, scandals and a protracted slow-growth economy finally caught up with big American banks.

Ever since the financial crisis, U.S. banks and their investors have held out hopes of a return to the good times, when lending profits steadily rose and commercial and investment banking flourished together.

http://in.reuters.com/article/2012/07/25/idINL2E8IP4F320120725

Economists Warn EU on 'Threshold of Catastrophe'

The euro crisis has returned with a vengeance this week, with Greece potentially facing bankruptcy, Spain teetering towards a bailout and even Germany at risk of losing its top credit rating. A group of prominent economists are calling for a radical restructuring of Europe and the euro zone to prevent a disaster of "incalculable proportions."

A panel of respected European economics experts are ringing the alarm bell this week over the euro crisis -- direly calling on all European leaders to move swiftly to deploy the most powerful tools available to halt the currency's downward spiral.
"We believe that as of July 2012, Europe is sleepwalking toward a disaster of incalculable proportions," the New York-based Institute for New Economic Thinking (INET) stated in a report warning leaders they need to move faster and more decisively to save the common currency. Otherwise it could very well disintegrate.

http://www.spiegel.de/international/europe/debt-crisis-economists-warn-of-euro-catastrophe-a-846327-druck.html

Is the fix in?

The Foreign Exchange Market

Or the Forex market in City-speak. It's hard to call this a dark corner. It's the biggest market in London, and in the world, in terms of the sheer volumes of money changing hands – $4trn (£2.6trn) daily. Not that this stops people from trying to manipulate it.

Central banks such as the Bank of England, the US Federal Reserves and lots of others are always at it, either trying to push their currencies higher (when they fear a forced devaluation and inflation) or lower (to make exports more competitive). Their efforts tend to meet with very limited success.

Speculators, particularly hedge funds, are very active and their role can also prove highly controversial.

Of more concern right now are the games being played by so called "high-frequency traders" who use black boxes to place blistering numbers of currency trades in nano seconds.

Lots of influential people question their activities and want the hammer brought down. They might have a point.

http://www.independent.co.uk/news/business/analysis-and-features/special-report-after-libor-where-will-the-next-scandal-be-7946899.html

Germany no longer considered Safe Haven

 'When your ship is sinking, there is no safe room on board. Likewise, when Europe is sinking, there is no safe country in which to stash your money. No, not even Germany.

Investors have been remarkably slow to grasp this simple truth...'

http://www.businessweek.com/articles/2012-07-24/germany-is-no-longer-a-safe-haven#r=read

Deliverable Currency with hedging

Elite E Services, Inc. and Currencies Direct

Whatever your foreign currency requirements, whether you are transferring savings for your new life in the sun, investing in property abroad, making regular currency transfers overseas or needing holiday money each time you travel, we understand that you will want to get as much for your money as you can. That's why Elite E Services, Inc. has teamed up with Currencies Direct to offer you the best service and the most competitive foreign currency exchange rates available today. With years of experience providing financial solutions, Currencies Direct have developed an innovative range of products and currency transfer services that can help to minimise your foreign exchange risks and take the hassle out of international payments.

Get deliverable currency, regular FX payments with hedging, forwards, and other deliverable Forex contracts

Euro crisis brings world to brink of depression

WASHINGTON (MarketWatch) — Europe is a tinderbox waiting for a spark.

The financial volatility in Europe may have created a situation that is now beyond the capacity of policy makers to control or curb.

When an accomplished fixer like Pascal Lamy, the head of the World Trade Organization and the longtime chief of staff for former European Commission President Jacques Delors, describes the situation in Europe as “difficult, very difficult, very difficult, very difficult,” you know it is time to run for cover.

http://www.marketwatch.com/Story/story/print?guid=EC6D6916-D59F-11E1-B099-002128049AD6

Moody's downgrades outlook for Germany, Luxembourg, and Netherlands from AAA

Moody's Investors Service has today revised to negative from stable the outlooks on the Aaa sovereign ratings of Germany, the Netherlands and Luxembourg. In addition, Moody's has also affirmed Finland's Aaa rating and stable outlook.


http://www.telegraph.co.uk/finance/financialcrisis/9422167/Moodys-put-negative-outlook-on-Germany-the-full-text.html