FXCM Said in Talks With Jefferies for $200 Million Rescue - (www.bloomberg.com) Jefferies Group is in talks to give FXCM Inc. (FXCM) a cash infusion of about $200 million, people with knowledge of the matter said, extending a lifeline to the currency brokerage hobbled by the Swiss central bank’s decision to let the franc trade freely against the euro. FXCM warned Thursday that client losses due to the Swiss National Bank’s action threatened the broker’s compliance with capital rules. The largest U.S. retail foreign-exchange broker, which handled $1.4 trillion of trades for individuals last quarter, said it was owed $225 million by clients. This wouldn’t be the first bailout Jefferies has extended to a financial firm in distress. When Knight Capital Group Inc. was teetering on the brink of collapse after bombarding markets with errant trades in August 2012, Jefferies and other firms gave the trading firm a $400 million cash infusion.
Largest Retail FX Broker Stock Crashes 90% As Swiss Contagion Spreads - (www.zerohedge.com) UPDATE: Knight Trading 2.0? Jefferies executive are reportedly on-site at FXCM discussing a $200 million bailout. As we first reported last night, FXCM was among the first of many retail FX brokers (and the largest) to see its clients suffer massive losses from yesterday's Swiss Franc surge following the SNB decision to unleash market forces. There are now at least 4 retail FX brokers(FXCM, Excel Markets, OANDA, and Alpari) who have announced "issues" but FXCM, being among the largest and publicly traded is the most transparent example of wjust what can go wrong when average joes are allowed 100:1 leverage. FXCM is now stuck chasing clients for money they do not (and will never) have.. and its stock is down 90%, trading a $2 this morning (down from $17 on Wednesday). As Credit Suisse notes, time is running out as regulators "tend to be impatient once capital requirements are breached."
Swiss Bankers Are Accelerating the Euro's Slide - (www.bloomberg.com) The euro is shaping to be the biggest casualty of Switzerland’s decision to scrap its currency cap. Soon after the Swiss National Bank unexpectedly ended its three-year policy of keeping the franc weaker than 1.20 per euro, bearish bets on Europe’s common currency soared. While setting a record low versus the franc yesterday, the euro also plunged 3.5 percent against a basket of 10 developed-nation peers, the most since its 1999 debut, and reached an 11-year low against the dollar today. The SNB’s decision removes a key pillar of support for the euro, boosting the odds that its recent slide will accelerate. Companies from Goldman Sachs Group Inc. to Pacific Investment Management Co., the world’s biggest manager of active bond funds, have in recent days talked about the euro falling to parity with the dollar, a 14 percent decline from its current level. The difference in the cost of options to sell the euro against the dollar, over those allowing for purchases, jumped by the most in almost two years yesterday, and extended its advance today to the highest since August 2012.The euro dropped 1.3 percent yesterday and tumbled further today, reaching $1.1522, the weakest level since November 2003. It was at $1.1527 as of 10:16 a.m. in New York.
Davos Disaster: From Grand Hotel to Big Bust in Six Months - (www.bloomberg.com) The Golden Egg, Davos’s newest luxurious hotel, was the place to be for the global elite at last year’s World Economic Forum, selling out all of its 216 rooms. On one evening, Israeli Prime Minister Benjamin Netanyahu and his wife dined at its restaurant, while Tony Blair was having a grappa in the bar with a colleague, according to General Manager Peter Pedersen. Six months later, the five-star hotel’s management company went bust and its owner, a Credit Suisse Group AG fund, had to start picking up the pieces. Despite its famous guests, which also included Goldie Hawn and Bono, and extensive research into the local market, InterContinental Davos was faced with empty rooms once the annual forum’s delegates went home.
US Oil Rig Count Collapses To Over 4 Year Low (as Production Hits Record High) – (www.zerohedge.com) US oil rig count tumbled almost 6% YoY - its biggest annual drop in 15 months.However, the 13% collapse in the last 8 weeks is accelerating faster than the 2001 and 2008 crisis and has dropped rig count to its lowest since October 2010. At the same timeproduction is surging - in fact at its highest pace on record... the game of chicken continues.