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.
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