<![CDATA[Hedgehogs.net: Ken Yeadon's connections' blogs]]> http://www.hedgehogs.net/pg/blog/keny/friends/?view=rss http://www.hedgehogs.net/pg/blog/skinnercm/read/11377759/the-finansers-week-15th-september-21st-september-2014 Sun, 21 Sep 2014 08:33:51 +0100 http://www.hedgehogs.net/pg/blog/skinnercm/read/11377759/the-finansers-week-15th-september-21st-september-2014 <![CDATA[The Finanser's Week: 15th September - 21st September 2014]]>

Our biggest stories of the past week are ...


]]> 11377759 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11377660/pakistan-holds-rate-subsidy-cut-may-hit-inflation-outlook Sat, 20 Sep 2014 16:53:14 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11377660/pakistan-holds-rate-subsidy-cut-may-hit-inflation-outlook <![CDATA[Pakistan holds rate, subsidy cut may hit inflation outlook]]>     Pakistan's central bank held its policy rate steady at 10 percent, as expected, saying the current outlook for inflation of around average 8 percent inflation in the 2015 financial year might change adversely if the subsidy to to electricity is cut and a gas infrastructure development cess is levied
    The State Bank of Pakistan (SBP), which has maintained its policy rate since raising it by 100 basis points in 2013, added that today's decision required a balancing of the tradeoffs between ensuring the continuation of macroeconomic stability and assuaging the fallout from potential damages due to floods.

    The SBP issued the following statement:

"The State Bank of Pakistan has decided to keep the policy rate unchanged at 10.0 percent. The decision was taken by the Central Board of Directors of SBP at its meeting held under the chairmanship of Governor Mr. Ashraf Mahmood Wathra in Karachi today.
The complete text of the decision is as follows:

The post July monetary policy decision period continued to witness stable macroeconomic conditions. This was most visible in the headline variable of inflation that declined to 7.0 percent YoY in August 2014, which is its lowest level since June 2013. Moreover, after recording an improved 4.1 percent growth rate in FY14, real economic activity is expected to continue in FY15. The other highlight of this stability is the gains on fiscal liberalization: shrinking budget deficits, contained government borrowings, and improved debt profile.

Following on the actual number of 8.6 percent in FY14, the average CPI inflation during Jul-Aug 2014 is recorded at 7.4 percent. This declining trend is broad based since both measures of core inflation, Non- Food Non-Energy (NFNE) and trimmed mean, also decelerated YoY to 7.8 percent and 7.14 percent in August 2014 as compared to 8.7 percent and 7.9 percent in June 2014, respectively. Although actual low inflation might weigh positively on market sentiments, it is the future path of inflation that matters for monetary policy decision. The current outlook of around 8 percent average CPI inflation for FY15 might change adversely if the subsidy to electricity is cut and Gas Infrastructure Development Cess is levied.

After demonstrating low growth since 2008, real economic activity started to show signs of revival in FY14. Continuation of the current growth momentum, however, primarily hinges on agriculture production in FY15. This is because Large Scale Manufacturing (LSM) growth might remain constrained due to continued energy shortages; reduced production capacity of independent power plants; low supply of gas to fertilizer plants; lower domestic and international prices in the sugar sector; and higher inventories and slower exports growth prospects in food and textile sectors, respectively.

Incorporating the latest trends in exports and imports, oil payments in particular, trade deficit is going to dominate the composition of external current account deficit, even with a healthy growth in workers’ remittances. Declining private capital inflows, foreign direct investments in particular, would present continued challenges in managing the balance-of-payments position. In this regard, realization of expected privatization receipts and issuance of dollar-denominated Eurobond/Sukuks would be important.

In addition to the risks identified above, ongoing political impasse, delay in the finalization of fourth IMF review, and the current heavy rains and floods, which have engulfed central and southern Punjab, threaten the nascent recovery in economic activity. The former two would weigh more on the private capital inflows. The latter can potentially disrupt the output and supply chain of the perishable food items, which challenges an otherwise benign inflationary outlook. While it is going to take some time before the full extent of damages arrive, initial opinions and past experiences suggest that the current floods would damage some khariff crops and may disrupt supply chain temporarily. Besides having implications for economic growth, floods can also create macroeconomic imbalances by putting pressures on fiscal and external sector. Moreover, supply of loanable funds in the credit to private sector market may also be adversely affected, at least initially. Reflecting these apprehensions indeed, there is deterioration in SBP- IBA’s Consumer Confidence Survey of September 2014 as well.

Policy vigilance requires balancing the tradeoffs between ensuring the continuation of macroeconomic stability, especially in the external sector, and assuaging the fallout of potential damages due to floods. Therefore, the Board of Directors, State Bank of Pakistan, has decided to keep the policy rate unchanged at 10 percent. "


http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11377650/central-bank-news-link-list-sep-20-2014-pakistan-stocks-down-ahead-of-saturday-central-bank-meeting Sat, 20 Sep 2014 10:23:21 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11377650/central-bank-news-link-list-sep-20-2014-pakistan-stocks-down-ahead-of-saturday-central-bank-meeting <![CDATA[Central Bank News Link List - Sep 20, 2014 - Pakistan stocks down ahead of Saturday central bank meeting]]>
Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11377645/nigeria-holds-rate-but-worried-over-inflation-fx-rate Sat, 20 Sep 2014 08:33:20 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11377645/nigeria-holds-rate-but-worried-over-inflation-fx-rate <![CDATA[Nigeria holds rate but worried over inflation, FX rate]]>     Nigeria's central bank maintained its policy rate at 12.0 percent but said it was concerned about the potential impact on inflation and the exchange rate from banks' high level of liquidity that was not being used for productive and profitable lending to the real sector of the economy.
    The Central Bank of Nigeria (CBN), which has kept its rate steady since October 2011, encouraged banks to lend excess reserves to the real economy but noted their "apathy to lending" and their inclination to place an additional 866 billion naira in the banking system from maturing bonds in October into the Standing Deposit Facility or use it to increase pressure on the exchange rate.
   The central bank's Monetary Policy Committee was split between further tightening the monetary policy stance but a majority voted to retain the Monetary Policy Rate (MPR) at 12 percent with a corridor of plus/minus 200 basis points, the public sector Cash Reserve Requirement (CRR) at 75.0 percent and the private sector CRR at 15.0 percent.
    CBN issued the following statement:

"The Monetary Policy Committee (MPC) met on September 18 and 19, 2014 with all the 12 members in attendance. The Chairman welcomed the new member, representing the Board of the Central Bank of Nigeria, Mr. Stanley I. Lawson to membership of the Committee. The meeting held against the backdrop of the increasingly limited choices for monetary policy, particularly, in the emerging market and developing economies; tapered recovery in the euro area coupled with the social and political tensions in the domestic and global environment, some of which have had fundamental impact on domestic macroeconomic management. The Committee reviewed key developments in the global and domestic economy up to mid-September 2014, and the outlook for the near-term.

International Economic Developments
The Committee noted the slow global growth prospects as the IMF, in July, marked down its projection by 0.3 per cent to 3.4 per cent, reflecting weak economic recovery, particularly in the Euro Area, and a less than optimistic outlook for several emerging market economies. Global growth which moderated more than expected in the first quarter of 2014 regained momentum in the second quarter although recovery remained largely uneven. The United States provided strong tailwinds for growth recovery but fiscal constraints continued to limit robust possibilities. Similarly, economic activity in the United Kingdom maintained a strong momentum in the second quarter, supported by improved household confidence and an impressively recovering housing market. Growth in China also recovered following the fiscal policy stimulus and a surge in credit.
In contrast, growth moderated in Japan after the VAT hike in April, but the quantitative easing programme of the Bank of Japan continues to support recovery. Growth in the Euro area is expected to strengthen to 1.1 per cent in 2014 and 1.5 per cent in 2015, but would remain uneven across the region, reflecting continued financial fragmentation, impaired private and public sector balance sheets, and high unemployment in some EU economies. In the emerging markets and developing economies, growth is projected
at 4.6 per cent in 2014, which is 0.2 percentage point lower than the earlier projection. The sources of growth include strong external demand from the advanced economies; however, tight financial condition is expected to dampen growth in domestic aggregate demand.
Global inflation has remained relatively stable while spare capacity remains large, suggesting no significant inflationary pressures in the short-to-medium-term. The stance of monetary policy has remained unchanged across most advanced and emerging economies in view of the unclear outlook for monetary conditions and financial stability especially in the post-QE tapering era. The expectations of increase in policy interest rate remain in focus in the US and the UK, even though the Fed reaffirmed that it would maintain the current highly accommodative monetary policy stance. The European Central Bank (ECB) and Peoples Bank of China (PBoC) have also announced new monetary stimulus programmes which will moderate the impact of the end of QE3 on frontier markets.

Domestic Economic and Financial Development Output
The Committee noted the continued resilience of the economy as real GDP grew by 6.54 per cent in Q2, 2014 compared with 5.40 per cent in the corresponding quarter of 2013. The observed growth rate also surpassed the 6.21 per cent recorded in the Q1 of 2014. The non-oil sector remained the main driver of growth recording 6.71 per cent in Q2, 2014; although lower than the 8.21 and 8.88 per cent recorded in Q1, 2014 and the corresponding quarter of 2013, respectively. The decline in growth of non-oil GDP was traced to the decline in agricultural output, construction, trade and services relative to the levels recorded in Q1, 2014. The slowdown in agricultural output was attributed to the insurgency activities in the North Eastern axis and some parts of the North Central States which led to displacement of farming communities, thereby limiting agricultural activities and, hence, output from that region.
Growth in the services and industry sectors remained relatively stable compared with the corresponding period in 2013. The Committee commended all levels of government and the general population for the coordinated, prompt and effective response to the Ebola Virus Disease (EVD) in Lagos and Port Harcourt; two cities that are commercial hubs and leading growth axes for the service and industry sectors of the economy.
The oil sector grew by 5.14 per cent in Q2 2014, a marked reversal from the decline recorded in the preceding four quarters. The Committee welcomed the intensification of efforts by government at addressing vandalism of oil facilities and theft of crude oil in the Niger Delta region as well as efforts towards addressing gas supply shortages to the power plants. The Committee reiterated its commitment to continue to support the efforts, in addition to facilitating other measures aimed at promoting inclusive non- inflationary growth.

Headline inflation rose to 8.5 per cent in August from 8.3 in July 2014. The mild but sustained underlying inflationary pressures were attributable mainly to food production and distribution challenges posed by the insurgency activities. From 9.4 per cent in April 2014, food inflation, measured on a year-on-year basis, rose to 10.0 per cent in August while core inflation moderated consecutively in the last two months since June 2014. In August 2014, the year-on-year core inflation was 6.3 per cent, down from 8.1 and 7.1 per cent in June and July, respectively. The Committee was concerned that the insurgency was forcing a switching from domestic to imported food to meet domestic shortfall with huge impact on external reserves and underscored the need to expedite action to restore normalcy to
the troubled region to sustain the tempo of growth. The Committee further reaffirmed its commitment to sustain efforts at ensuring price stability.

Monetary, Credit and Financial Markets’ Developments
Broad money supply (M2) grew by 2.94 per cent in August 2014 over the level at end-December 2013 compared with 4.83 per cent in July. The annualized growth of 4.41 per cent in August 2014 was below the growth benchmark of 14.52 per cent for the year. Net domestic credit, however, increased by 5.31 per cent in August relative to the end-December 2013 level. When annualized, net domestic credit rose by 7.96 per cent, compared with the growth benchmark of 28.5 per cent for fiscal 2014. The rather slow expansion in money supply in August reflected the 10.17 per cent contraction in net foreign assets of the banking system (NFA).
Money market interest rates, however, remained within the MPR corridor as the overnight and collaterized OBB rates moderated from 11.30 and 11.49 per cent in August to 11. 08 and 10.62 per cent on 11 September 2014, respectively. The MPC noted that both rates traded around the lower band of the MPR corridor on account of the liquidity surfeit in the banking system.
Activities in the capital market were bearish during the period with the All-Share Index (ASI) decreasing by 4.3 per cent from 42,482.48 on June 30, 2014 to 40,672.94 on September 12, 2014. Market Capitalization (MC) also decreased by 4.3 per cent from N14.03 trillion on June 30, 2014 to N13.43 trillion on September 12, 2014. Market indicators declined owing to the profit taking activities of investors.

External Sector Developments
The average naira exchange rate remained considerably stable in all segments of the foreign exchange market. The exchange rate at the retail-Dutch Auction System Segment (rDAS) was stable at N157.29/US$, but depreciated at the inter-bank and substantially at the BDC segments between July and August 29, 2014. At the interbank segment, the naira depreciated slightly by N0.32 or 0.20 per cent to $/N162.40 from $/N162.08. Similarly, at the BDC segment, the exchange rate depreciated by N2.00 or 1.2 per cent from US$/N167.00 to U$/N169.00. The premium between the rDAS and interbank rates was 3.25 per cent while that between the rDAS and BDC rates stood at 7.45 per cent in the review period. Gross official reserves rose from US$39.1 billion at end-July to US$40.7 billion on 17th September, 2014. The current level of external reserves provides approximately 7 months of imports cover.

The Committee’s Considerations
The MPC expressed satisfaction with the relative stability in the economy while also noting the risks that lie ahead. The key risks include: the possibility of capital reversals as the Fed’s Quantitative Easing in the US finally ends in October, amidst dwindling oil output and declining oil prices, domestic security challenges and upward trending headline inflation. The Committee further expressed concern about high banking system liquidity and its potential effects on inflation and the exchange rate. The policy challenges, the Committee noted, would include sustaining the stability of the naira exchange rate, managing the vulnerability to capital flow reversal, building fiscal buffers to insure against global shocks, managing inflation and exchange rate expectations and safeguarding the financial system stability as well as a buildup in election related spending.
The Committee welcomed the efforts by government to address some of the constraints and risks to economic activity like the insurgency in the North-East and the Ebola Virus Disease epidemic. It noted that as progress is made in these areas and in respect of other constraints like power and improving SME financing, the outlook for growth appears bright and prospects for upward price pressure would be moderated. The Committee further noted that the
restrictive stance of monetary policy provided important defenses against structural liquidity in the banking system and also reaffirmed the willingness to play a key role in managing expectations around exchange rate and inflation vulnerabilities. Consequently, adequate consideration would need to be accorded the goal of reining-in banking system liquidity to safeguard the objective of price stability.
The Committee was, however, concerned that banks were holding large excess reserves averaging over N300 billion even when there were ample opportunities for productive and profitable lending to the real sector of the economy. The concern was further strengthened by the reality of injecting an additional N866 billion into the system through the redemption of maturing AMCON bonds in October. Given the apathy to lending, banks may be inclined more to placing these new funds in the SDF or use it to increase pressure on the exchange rate. The Committee advised the Bank to explore ways of encouraging banks to lend such excess reserves to the real sector.
In light of the foregoing and consideration of other key risk factors, the Committee was of the view that the direction for policy in the short- to medium term would be either to retain the current tight stance of monetary policy or further tighten monetary policy.
The Committee’s Decisions
In view of these developments, the Committee was split between retaining the current stance of monetary policy and further tightening. Consequently, 6 members voted to retain the current stance of monetary policy. Five members voted to increase private sector CRR while while one member voted to increase public sector CRR. In addition, one member voted for an asymmetric corridor around the MPR. Consequently, the MPC decided by a majority vote to:
  1. (i)  Retain the MPR at 12 per cent with a corridor of +/- 200 basis points around the midpoint;
  2. (ii)  Retain the public sector Cash Reserve Requirement at 75.0 per cent; and
  3. (iii)  Retain the private sector Cash Reserve Requirement at 15.0 per cent.
Thank you.
Godwin I. Emefiele
Governor, Central Bank of Nigeria 19th September 2014 "


http://www.hedgehogs.net/pg/blog/asiablues/read/11377612/central-banks-biggest-concern-should-be-market-stability Fri, 19 Sep 2014 23:56:19 +0100 http://www.hedgehogs.net/pg/blog/asiablues/read/11377612/central-banks-biggest-concern-should-be-market-stability <![CDATA[Central Banks Biggest Concern Should Be Market Stability]]> By EconMatters

Good Year Performance Wise

We closed out our bond short this week and are up 42% so far this year. The reason we closed out our bond short is that we are trying to make money and control risk as much as possible in a market that frankly speaking is off its rockers! Who knows what “Fair Market Value” is for any asset?

Markets are so influenced by Central Bank liquidity that we have little confidence in what the actual ‘market prices’ are for many assets, we strategically take advantage of extreme mispricing’s relative to our models, i.e., the low hanging fruit, and get out of the market. I don`t want to hold anything these days!

Liquidity, Liquidity, Liquidity

As I was shorting S&P Futures late Thursday night it once again hit home how close financial markets are to some major shocks all due to ridiculous amounts of liquidity by Central Banks all over the world. The movements in the currencies as of late are starting to become worrisome, and with the movements on Thursday night I will not be surprised if we start having some currency inspired major volatility in other asset classes.

Strong Dollar

Have you seen the effect of the strong dollar on commodities, silver in particular? I will not be surprised to wake up some morning and find silver trading at $14 an ounce at this point due to some holders getting liquidated in a massive way.

Too Insane That Fed Will Still Be Buying 15 Billion Next Month with S&P at these levels

So late Thursday night Japan hits 2014 highs, then Europe hits 2014 highs, and the US Futures hit all-time highs, and I was struck by the fact that next month the Fed will still be buying 15 Billion of asset purchases for October.

Stock Buybacks & Earnings

This thought further hit home the fact that as earning`s season is just around the corner, I am pretty sure that much of the Dow`s outperformance of late is companies buying back stock to hit their respective earning`s marks. And as Oracle CEO Larry Ellison steps down what did Oracle announce, another 13 Billion in stock buybacks to soothe investors’ concerns. Low interest rates have fueled a ridiculous and unhealthy amount of stock buybacks at the top of valuations, and this has truly distorted financial markets.

Draining Market Liquidity Primary Concern Right Now!

The Fed`s biggest concern needs to be draining the liquidity in the financial system before the entire market collapses, and not the unemployment rate, slack in the unemployment rate, or even inflation at this point. The reason is that sure central banks can pump so much liquidity into the system that markets will not go down, volatility will be reduced, but after several years of artificial support, all the liquidity in the world isn`t going to support an unsustainable market led by disproportional and untimely stock buybacks, asset prices with overextended multiples, and every company in the world coming to the market to cash in on the IPO madness due to robust excess market liquidity.

Retail Investors Get Out of the Market – Don`t be the ‘Suckers/Muppets’ this time!

Retail investors just go to cash because the financial markets are going to crash it is just a matter of when and not if. The Fed will have much bigger employment worries on their hands when the entire financial system collapses because central banks mucked up markets with actual buying of securities in the Bank of Japan, ECB, China and the US Federal Reserve. 

Somebody Has to Have Relative Stronger Currency

We are starting to see the strain in the currencies, and everyone cannot debase their currency at the same time, and the market is starting to look away from the US Dollar being the weak currency, and if this continues gold and silver markets will get destroyed, US corporate profits are going to get hit, and all the stock buybacks in the world are not going to help US Corporations hit the earning`s marks.

Alibaba a $20 Stock without Central Bank Liquidity

It is funny watching the analysts discuss Alibaba`s stock price and what constitutes a proper multiple for the stock, is this pre-Central Bank Liquidity or post-Central Bank Liquidity? Is this before or after the financial collapse of the latest fed inspired bubble? Or China for that matter as their property market isn`t trending in the right direction at the moment! 

Currency Moves & Magnitude of Moves Warning Sign for Markets

I am not calling for a market top, markets will go up until they stop going up, but trading late this week the sentiment that most provoked my psyche was just how vulnerable and shaky the entire financial system is right now, and it is only being masked by massive central bank liquidity, which is ultimately unsustainable, and then what? Look to the currency markets as they are starting to signal that things aren`t all  â€˜Hunky-Dory’ right now by the magnitude of the currency moves, there is just too much liquidity in the financial system right now, and that is a ticking time bomb waiting to explode!

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http://www.hedgehogs.net/pg/blog/mikeohara/read/11377541/implementing-algo-strategies-on-fpgas-acirc-part-2 Fri, 19 Sep 2014 17:55:37 +0100 http://www.hedgehogs.net/pg/blog/mikeohara/read/11377541/implementing-algo-strategies-on-fpgas-acirc-part-2 <![CDATA[Implementing Algo Strategies on FPGAs &acirc; Part 2]]>

This article originally appeared on Quant FORUM at http:/ / tabbforum.com/ microsites/ quantforum/ articles/ implementing-algo-strategies-on-fpgas-part-2


http://www.hedgehogs.net/pg/blog/skinnercm/read/11376738/maybe-its-not-so-simple-after-all Fri, 19 Sep 2014 12:44:01 +0100 http://www.hedgehogs.net/pg/blog/skinnercm/read/11376738/maybe-its-not-so-simple-after-all <![CDATA[Maybe itâs not so Simple, after all]]>

For some time, I’ve banged on about banks must redesign for a digital core.  It’s no longer a world that can live in a batch overnight update, when real-time everything is here.


]]> 11376738 http://www.hedgehogs.net/pg/blog/skinnercm/read/11376735/us-digital-bank-book-launch Fri, 19 Sep 2014 12:23:46 +0100 http://www.hedgehogs.net/pg/blog/skinnercm/read/11376735/us-digital-bank-book-launch <![CDATA[US Digital Bank Book Launch]]>

We are launching Digital Bank officially in the USA over the next few weeks.


]]> 11376735 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11376727/central-bank-news-link-list-sep-19-2014-bank-of-england-back-on-track-after-scots-reject-split Fri, 19 Sep 2014 09:03:22 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11376727/central-bank-news-link-list-sep-19-2014-bank-of-england-back-on-track-after-scots-reject-split <![CDATA[Central Bank News Link List - Sep 19, 2014 - Bank of England back on track after Scots reject split]]>
Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.


http://www.hedgehogs.net/pg/blog/skinnercm/read/11376724/things-worth-reading-19th-september-2014 Fri, 19 Sep 2014 08:24:04 +0100 http://www.hedgehogs.net/pg/blog/skinnercm/read/11376724/things-worth-reading-19th-september-2014 <![CDATA[Things worth reading: 19th September 2014]]>

Things we're readting today include ...


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