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Sep 18, 2014

FRB of NY - September 18, 2014: Agency MBS Transaction Summary.

Agency MBS Transaction Summary
Gross purchases from September 11 through September 17: $6,453 million
Sales (dollar rolls) from September 11 through September 17: $0 million
Net purchases from September 11 through September 17: $6,453 million

All amounts reflect current face
Purchases summarize all trades executed during the indicated period including purchases associated with dollar rolls.*
Transactions ($ million)
Settlement Month
30 Year
15 Year
Total  2,0442,74801,661
*Does not include trades associated with small value exercises.

SEC | Press Release | Enforcement Actions - September 18, 2014: SEC Charges Tacoma, Wash.-Area Firm for Undisclosed Principal Transactions and Misleading Performance Advertisements.

SEC Seal

09/18/2014 01:00 PM EDT

The Securities and Exchange Commission today charged an investment advisory firm located outside Tacoma, Wash., with engaging in hundreds of principal transactions through its affiliated broker-dealer without informing clients or obtaining their consent.

Strategic Capital Group LLC, which is additionally charged with distributing false and misleading advertisements to investors, agreed to pay nearly $600,000 to settle the SEC’s charges.  The firm’s CEO N. Gary Price was charged with causing some of the firm’s violations, and agreed to pay a $50,000 penalty to settle the charges against him.

In a principal transaction, a firm acting for its own account or through an affiliated broker-dealer buys a security from a client account or sells a security to it.  Principal transactions can pose potential conflicts between the interests of the adviser and the client, and therefore advisers are required to disclose in writing any financial interest or conflicted role when advising a client on the other side of the trade.  They also must obtain the client’s consent.

An SEC investigation found that Strategic Capital engaged in more than 1,100 principal transactions through its brokerage affiliate RP Capital LLC without making the required disclosures to clients or obtaining consent beforehand.  Strategic Capital also failed to seek best execution for the transactions it executed through RP Capital.  Price signed regulatory filings falsely stating that the firm did not engage in principal transactions.

The SEC investigation also found that Strategic Capital provided prospective investors with a pair of false and misleading advertisements.  One advertisement failed to disclose that the portrayed results were partially based on returns of an index rather than actual, historical returns achieved by Strategic Capital’s recommendations.   The second advertisement did not disclose that the portrayed results did not deduct fees and thus materially overstated Strategic Capital’s investment performance.

“Investment advisers must be fully forthcoming about how they execute client trades and portray past performance,” said Marshall S. Sprung, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.  “Strategic Capital clients were not provided all of the information they needed to evaluate the firm’s potential conflicts of interest and investment management skills.”

According to the SEC’s order instituting a settled administrative proceeding, Strategic Capital also failed to implement proper compliance procedures at the firm.

The SEC’s order finds that Strategic Capital, based in Gig Harbor, Wash., violated the Investment Advisers Act of 1940, specifically the antifraud, principal transactions, advertising, compliance, and reporting provisions.  The order finds that Price caused Strategic Capital’s violations of the compliance and reporting provisions.  Strategic Capital’s disgorgement amount of $368,459 will be distributed to current and former clients, and the firm also must pay prejudgment interest of $17,831 and a penalty of $200,000.  Without admitting or denying the findings in the order, Strategic Capital and Price agreed to cease and desist from committing or causing future violations of these provisions.

The SEC’s investigation was conducted by Jeremy E. Pendrey and Erin E. Schneider, who work in the Asset Management Unit in the San Francisco Regional Office.  The SEC examination that led to the investigation was conducted by Tracey Bonner, James Marchi, and Alice Schulman of the San Francisco office’s investment adviser/investment company examination program.

FTC | Consumer Updates - September 18, 2014: Taken for a glide.

Federal Trade Commission Consumer Information

by Amy Hebert
Consumer Education Specialist, FTC

Would you be willing to exercise 3 minutes a day to get fit? It’s a compelling proposition. Unfortunately, in the case of the ab GLIDER, lost pounds, body inches, or clothing sizes weren’t just an easy glide away.
Read more >

Bloomberg | Share The View - September 18, 2014: Voting 'Nae' and Fighting Google

Share The View


Mark Gilbert: "I sympathize with liberationist Scots going to the polls today, lured by the siren song of independence after 307 years of being shackled to a U.K. government that has offered indifference, hostility and, lately, bribery. Nevertheless, I hope the 'Better Together' campaign prevails when the results are announced early tomorrow."  Read more...

Mohamed A. El-Erian: "The U.S. Federal Reserve is trying to squeeze a bit more out of a stimulus policy that relies heavily on artificially boosting stock and bond markets to generate growth. In doing so, it is running a higher risk of financial instability, and increasing its dependence on a Congress that shows little sign of being able to handle fully its economic responsibilities."  Read more...

Leonid Bershidsky: "The growing European backlash against Google, reflected in the European Commission's rejection of the search giant's antitrust settlement and a German minister's request for it to reveal its search algorithms, suggests it's hard to regulate Google in a way that increases, rather than reduces, its usefulness. ... Regulators should concentrate on increasing user awareness of the Google practices it considers unfair."  Read more...

Virginia Postrel:  "American colleges often praise 'diversity' as one of their highest values. The term is, of course, a well-understood code word for diversity not of thought or values but of race and ethnicity. The assumption is that people of different backgrounds and experiences, including ethnic backgrounds and immigrant experiences, will naturally bring with them diversity of thought and values and, hence, enrich campus cultural and intellectual life. The problem now facing the California State University system is that this assumption may very well be true." Read more... 

Megan McArdle: "I’ve spoken before about the lack of drama in middle-class life these days and how it has affected television and movies. ... These are all great advances in human flourishing, but it has done away with most of the stock dramatics that sustained the fiction and theater of yesteryear. I suspect that’s the reason so much of today’s critically acclaimed television dips into the criminal underworld, where there’s still plenty of life-and-death drama to go around."  Read more...

Adam Minter: "Over the weekend, for the second time in as many years, thousands of demonstrators took to the streets in China’s southern Bolou County to oppose the construction of a proposed trash incinerator in their area. ... The demonstrators have reason to be concerned: The fumes coming out of any new incinerator are likely to be more toxic than ever before." Read more...

Dhiraj Nayyar: "China’s President Xi Jinping played to stereotype when he described his country as the world’s factory and India as the world’s back office in an op-ed article heralding his arrival in the latter yesterday. How ironic then that Xi’s first port of call wasn’t Bangalore, the heart of India’s outsourcing industry. It was instead Ahmedabad -- the largest city in Gujarat state, which can justifiably lay claim to being India’s factory."  Read more...

Barry Ritholtz (Read the news roundup)
Matt Levine (Read the news roundup)
Jonathan Bernstein (Read the news roundup)
  • Julia Azari on what’s lost when parties lie about their pasts: Read more... 
  • Andrew Gelman passes along lots of charts about state ideological levels: Read more...
  • Why you might want to be skeptical about that political science paper on smell and politics, from Steve Greene: Read more...

RT Videos | Keiser Report - September 18, 2014: Desperate Times (E655)

Keiser Report: Desperate Times (E655)
In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss that only those who can leave behind everything they have ever believed in can hope to escape the coming desperation. From buying water to keep your plants green in a drought to fracking for natural gas at a loss, however, it appears very few are willing to leave behind all that they believe. In the second half, Max interviews Bill Powers, author of “Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth,” about the zero percent interest rate that keep people in the dark on the high costs of fracking and the coming 70s style energy crisis due to growing demand based on fundamental lies.

Bloomberg | European Markets at Close Report - September 18, 2014:European Stocks Gain as Bayer Rallies on Spinoff Plans

    Sep 18, 2014 10:32 AM PT
European stocks rose for a second day, after Federal Reserve Chair Janet Yellen indicated interest rates won’t increase anytime soon, and Bayer AG rallied on plans to spin off its plastics unit.
Bayer contributed the most to the Stoxx Europe 600 Index’s gain.Sulzer (SUN) AG jumped the most in almost three years after saying it is in talks with Dresser-Rand Group Inc. about a possible transaction. TUI Travel Plc rose 4.6 percent after Morgan Stanley upgraded the shares. EasyJet Plc advanced after saying it will increase its dividend-payout ratio and exercise purchase rights for 27 Airbus Group NV A320 planes.
The Stoxx 600 climbed 0.9 percent to 347.41 at 4:30 p.m. inLondon, extending gains after data showed the number of Americans filing applications forunemployment benefits plunged last week to a two-month low. The equity gauge is heading for a 1 percent weekly gain.
“There is still this tremendous environment for equities with the Fed indicating that it is not ready to raise interest rates right now and we still have a helpful weak euro for export-orientated companies,”Robert Halver, head of capital-markets research at Baader Bank AG in Frankfurt, said in a telephone interview.
The Fed tapered monthly bond buying by $10 billion for a seventh time, staying on course to end the program in October. Policy makers said the economy is expanding at a moderate pace and inflation is below target, while maintaining a commitment to keep interest rates near zero for a “considerable time” after asset purchases end.

Jobless Claims

Jobless claims in the U.S. decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. The median forecast of economists surveyed by Bloomberg called for drop to 305,000.
Results of the European Central Banks first targeted-lending program showed a lower-than-forecast allotment of funds. The Frankfurt-based central bank said it alloted 82.6 billion euros ($106.5 billion) at a fixed interest rate of 0.15 percent. Estimates in a Bloomberg News survey of economists ranged from 100 billion euros to 300 billion euros, with a median of 150 billion euros.
Voters in Scotland will today decide whether to break from the U.K. in a ballot that could spell the end of a three-century-old union. Polling stations opened at 7 a.m. local time and will close at 10 p.m. With a record 97 percent of the electorate registered to vote and turnout forecast to be more than 85 percent, the result may not be known until 6 a.m. or later tomorrow.

FTSE Gains

The FTSE 100 Index (UKX) advanced 0.5 percent. The benchmark index fell 0.4 percent this week through yesterday amid uncertainty surrounding a potentially independent Scotland. A measure of expected volatility for FTSE 100 shares has rallied 49 percent since its low on Aug. 27.
National benchmark indexes rose in 14 of the 18 western European markets today. Germany’s DAX jumped 1.3 percent and France’s CAC 40 added 0.7 percent.
Bayer climbed 6 percent to 112.50 euros. Germany’s biggest drugmaker, which is focusing on its lucrative life-sciences operations, said its plastics business will be listed on the stock market as a separate company. The decision is subject to approval by the supervisory board.
Sulzer jumped 8.4 percent to 136.30 Swiss francs. The pumpmaker is considering expanding its energy-equipment business through a combination with Dresser-Rand.
TUI Travel (TT/) advanced 4.6 percent to 383.8 pence. Morgan Stanley upgraded the shares to overweight from equal weight and added the stock to its best ideas list, citing an expected 12 percent compound annual earnings growth rate from 2014 to 2017, as well as savings after its all-share merger with TUI AG.

EasyJet Rises

EasyJet climbed 0.7 percent to 1,347 pence, after earlier gaining as much as 2.8 percent. Europe’s second-biggest discount airline said it will increase the ordinary dividend payout ratio to 40 percent of profit after tax from one-third. It will take delivery of the single-aisle airliners from 2015 through 2018.
Booker Group Plc rose 7.8 percent to 125.4 pence. The food wholesaler reported a 1.8 percent increase in second-quarter like-for-like sales, excluding its Makro business, and said it is on course to meet forecasts for the year through March 2015.
To contact the reporter on this story: Jonathan Morgan in Frankfurt
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.netAlan Soughley

Bits | The Business of Technology - September 18, 2014: Happy Birthday, Silicon Valley.

Morning Report
Happy Birthday, Silicon Valley | If there was any day to celebrate Silicon Valley's roots, today might be it.

On Sept. 18, 1957, eight lab workers, fed up with their boss, walked off the job in Mountain View, Calif. The man they worked for, William Shockley, a Nobel Prize winner for co-inventing the transistor, had just decided not to continue research into silicon-based semiconductors. Frustrated, the eight employees decided to take on the task themselves.

The lab workers - who would become known as "the traitorous eight" - went on to invent the microprocessor. Their efforts helped create Fairchild Semiconductor, the grandfather of tech companies. Two of the men also went on to start Intel, another started the venture capital firm known as Kleiner Perkins, and another financed a start-up that became AMD.

"It was the birth notice of Silicon Valley," wrote Joel Shurkin, Mr. Shockley's biographer.

FTC | Consumer Update - September 18, 2014: Answering the call about mobile tech

Federal Trade Commission Consumer Information

by Carol Kando-Pineda
Counsel, Division of Consumer & Business Education

Have you ever snagged a great deal right from your tablet? Or maybe you’ve donated to a charity from your phone? Then you know first-hand that mobile technologies give us unprecedented efficiency and convenience. The FTC is addressing the issues that affect consumers as new mobile technologies come on the scene. The Commission has sued companies that have broken the law, held workshops about mobile commerce, and issued several reports documenting the state of mobile privacy, security, and consumer protection.
So when our sister agency, the Consumer Financial Protection Bureau, put out a call to learn more about financial services and mobile technology, especially as used by underserved consumers, the FTC lent its support and sent comments. Here are some of the points we highlighted about the challenges consumers face when using mobile financial services.
Read more >

Reuters | Money - September 18, 2014: Fed dot chart illusions: James Saft.

Fed dot chart illusions: James Saft
(Reuters) - Like one of those old Op-Art posters beloved of hippies, staring too long into the Fed’s dot chart of interest rate expectations can make you see things which aren't there.

Calpers names Ted Eliopoulos chief investment officer
(Reuters) - The California Public Employees' Retirement System said Ted Eliopoulos would assume the role of chief investment officer at America's largest public pension fund.

Britain's City Financial to double HK staff with new fund: CEO
HONG KONG (Reuters) - British asset manager City Financial Investment Co Ltd aims to double its Hong Kong staff and launch a second hedge fund to take advantage of increased investment in the region, Chief Executive Andrew Williams said in an interview

RTTNews Forex Market Update - September 18, 2014.

Economic News
New home prices in most Chinese cities fell in August, data from the National Bureau of Statistics showed Wednesday. (Sep 18, 2014Full Article
Sweden's economic growth for the second quarter was revised up sharply after national accounts calculations were based on the new ESA 2010 regulation. (Sep 18, 2014Full Article 
Norway's central bank left the key interest rate unchanged for the fifteenth rate-setting session in a row, as inflation and output outlook remained broadly unchanged from the previous decision in June. (Sep 18, 2014)Full Article
Ireland's economy grew for the second consecutive quarter in the three months to June, latest figures from the Central Statistics Office showed Thursday. Gross domestic product grew a seasonally adjusted 1.5 percent sequentially following 2.8 percent expansion in the first quarter, revised from 2.7 percent. (Sep 18, 2014Full Article
First-time claims for U.S. unemployment benefits fell by much more than anticipated in the week ended September 13th, according to a report released by the Labor Department on Thursday, with claims pulling back near the fourteen-year low set in July. (Sep 18, 2014Full Article
With new construction of multi-family homes showing a substantial pullback, the Commerce Department released a report on Thursday showing a much steeper than expected drop in U.S. housing starts in the month of August. (Sep 18, 2014Full Article 
Forex Top Story
New Zealand's gross domestic product expanded 0.7 percent on quarter in the second quarter of 2014, Statistics New Zealand said on Thursday, riding strong gains from the service industries. (Sep 18, 2014Full Article 
Japan posted a merchandise trade deficit of 948.5 billion yen in August, the Ministry of Finance said on Thursday - remaining in the red for a record 26th consecutive month. (Sep 18, 2014Full Article 
The South Korean government said Thursday it will increase the budget spending next year and run a wider fiscal deficit than expected to bolster economic growth that faces challenges from slow global recovery and weak domestic demand. Government spending will rise by 5.7 percent to KRW 376 trillion the next year, the finance ministry said in its budget proposals. (Sep 18, 2014Full Article
The Swiss National Bank on Thursday reaffirmed its currency ceiling and interest rate unchanged, as expected by economists, and expressed willingness to do more to defend the franc. The central bank maintained the minimum exchange rate of CHF 1.20 per euro and left the target range for the three-month Libor unchanged at 0.0-0.25 percent. (Sep 18, 2014Full Article 
U.K. retail sales increased in August as sale of high powered vacuum cleaners and furniture, offset the decline in food store demand. Including auto fuel, retail sales volume increased 0.4 percent in August from July, when it remained flat, the Office for National Statistics reported Thursday. The monthly growth rate matched expectations. (Sep 18, 2014Full Article 
Banks took up less-than-expected amount of funds at the European Central Bank's first targeted longer term refinancing operation, damping hopes of the success of the measure that was aimed to boost liquidity to help revive lending to small businesses and households. (Sep 18, 2014Full Article
Crude oil prices are little changed Thursday morning, with traders looking ahead to some key U.S. economic data, including a report on weekly jobless claims. (Sep 18, 2014Full Article 
Gold prices are lower Thursday morning amid speculation that U.S. rate hikes will be at a faster pace once the Fed begins its monetary tightening. (Sep 18, 2014Full Article
Political News
Social media has given terrorist groups such as the Islamic State of Iraq and the Levant the ability to recruit Americans and others like never before, and the threat of Americans and others returning to their home countries from Syria to carry out terrorist attacks has become the chief issue of concern when he meets with his foreign counterparts, Homeland Security Secretary Jeh Johnson said Wednesday. (Sep 18, 2014Full Article 
U.S. fighter, attack and remotely piloted aircraft conducted seven airstrikes against Islamic State of Iraq and the Levant terrorists in Iraq on Tuesday and Wednesday, U.S. Central Command officials reported. (Sep 18, 2014)Full Article 
A historic referendum that decides the future of Scotland has begun. (Sep 18, 2014Full Article
OSCE Representative on Freedom of the Media on Thursday condemned the growing violence against journalists in Russia. (Sep 18, 2014Full Article 
General News
Astronomers using data from NASA's Hubble Space Telescope and ground observation have found an unlikely object in an improbable place -- a monster black hole lurking inside one of the tiniest galaxies ever known. (Sep 18, 2014Full Article 

The European Commission on Thursday published a list of the 155 small and medium-sized enterprises (SMEs) that will be first to benefit from its new EUR3 billion SME Instrument. (Sep 18, 2014Full Article