RPT-Wall St Week Ahead-Investors look to January effect at start of 2016
January 3, 2016--As Wall Street wraps up its flattest year since 2011, investors will have to deal with many of the same issues next year as they attempt to gauge market direction.
While many market participants have a host of worries heading into 2016 that could hurt stocks and keep volatility high, they remain optimistic for gains in 2016 and a strong start to the year could boost that case.
Source: Reuters
Nasdaq makes first share trade using blockchain technology
Market operator has spent millions experimenting with the technology behind Bitcoin
December 31, 2015--The Nasdaq stock exchange has used blockchain to transfer shares for the first time in what the US firm said was "a seminal moment" in the nascent technology.
Nasdaq said its Linq blockchain ledger had issued securities to an unnamed private investor, proving the concept of share trades through a decentralised ledger, and removing the need for a middleman such as a clearing house.
Source: The Telegraph
Exchange dealmaking to focus on new markets
December 30, 2015--Investors are anticipating a new round of dealmaking among some of the world's biggest stock exchanges next year as they look to boost their revenue streams by accessing new markets and products.
Fuelled by buoyant share prices and regulatory amendments, a cadre of new, young chief executives at top bourses are exploring fresh areas for growth including assets traded away from exchanges, such as currency trading, and showing increasing confidence in making deals.
Source: FT.com
IMF Working paper-The Impact of Unconventional Monetary Policy Measures by the Systemic Four on Global Liquidity and Monetary Conditions
December 30, 2015--Summary: The paper examines the impact of unconventional monetary policy measures (UMPMs) implemented since 2008 in the United States, the United Kingdom, Euro area and Japan-the Systemic Four-on global monetary and liquidity conditions.
Overall, the results show positive significant relationships. However, there are differences in the impact of the UMPMs of individual S4 countries on these conditions in other countries. UMPMs of the Bank of Japan have positive association with global liquidity but negative association with securities issuance. The quantitative easing (QE) of the Bank of England has the opposite association. Results for the quantitative easing measures of the United States Federal Reserve System (U.S. Fed) and the ECB UMPMs are more mixed.
Source: IMF
World Bank exit highlights China fears
December 30, 2015--When the Postal Savings Bank of China announced it had raised $7bn from a group of international investors it marked a significant step towards what is expected to be one of the biggest Chinese listings in 2016.
Alongside China Life and giants of global finance such as UBS and JPMorgan, it raised funds from the World Bank's private sector arm, the International Finance Corporation, representing a turnround for a state bank that just three years earlier had seen its president charged with corruption.
Source: IMF
China to suspend foreign banks' yuan business
December 30, 2015--China has suspended at least two foreign banks from conducting some cross-border yuan business,
according to people with direct knowledge of the matter.
Source: FIN24
Bond Buyers Readying Defenses for 2016 Leave Nothing to Chance
December 29, 2015--Bond exchange-traded funds, total-return swaps used to hedge
Investors try to revive shrinking credit-default swaps market
Wall Street is searching for new ways to protect corporate bond investments amid concern that traditional hedging tools aren't working properly as default rates rise.
Source: Bloomberg
Infographic-A Timeline of Failed Tech Predictions
December 29, 2015--In the realm of technology, predictions about the future are famously hard to make.
Technology evolves at a logarithmic pace. Even small incremental changes over time can compound to create an entirely different business reality in the future.
Entire industries can be created or changed out of nowhere, as companies go from "zero to one", as Peter Thiel might say.
Source: visualcapitalist.com
IMF Working paper-Sharing a Ride on the Commodities Roller Coaster: Common Factors in Business Cycles of Emerging Economies
December 29, 2015--Summary:
Fluctuations in commodity prices are an important driver of business cycles in small emerging market economies (EMEs). We document how these fluctuations correlate strongly with the business cycle in EMEs.
We then embed a commodity sector into a multi-country EMEs' business cycle model where exogenous fluctuations in commodity prices follow a common dynamic factor structure and coexist with other driving forces. The estimated model assigns to commodity shocks 42 percent of the variance in income, of which a considerable part is linked to the common factor. A further amplification mechanism is a "spillover" effect from commodity prices to risk premia.
Source:IMF
IMF Working Paper-Will Macroprudential Policy Counteract Monetary Policy's Effects on Financial Stability?
December 29, 2015--Summary: How does monetary policy impact upon macroprudential regulation? This paper models monetary policy's transmission to bank risk taking, and its interaction with a regulator's optimization problem. The regulator uses its macroprudential tool, a leverage ratio, to maintain financial stability, while taking account of the impact on credit provision.
A change in the monetary policy rate tilts the regulator's entire trade-off. We show that the regulator allows interest rate changes to partly "pass through" to bank soundness by not neutralizing the risk-taking channel of monetary policy. Thus, monetary policy affects financial stability, even in the presence of macroprudential regulation.
Source: IMF