Jeff Koons’s “Balloon Dog (Orange)” was auctioned for $52 million in 2013
Jeff Koon’s Ballon Dog (Orange), sold in November 2013, set a record for a work made by a living artist
PHOTOGRAPH BY CHARLES REX ARBOGAST—AP
Jeff Koons’s “Balloon Dog (Orange)” was auctioned for $52 million in 2013
Hallberg-Rassy 372: Swedish And Superb
The aft-cockpit HR 372 is well laid out for shorthanded long-distance voyaging. The signature HR windshield is so practical that it should be standard on all cruising boats.
For five decades, Swedish builder Hallberg-Rassy’s signature blue topside stripe has been found from the northern nooks of the Atlantic to the lazy lagoons of the Pacific. Few marine manufacturers have achieved the company’s longevity, reputation, or output. It’s market strategy has been simple: Deliver consistent quality coupled with conservative design.
Thus, the R in the logo has always stood for Rassy, not racy. But in the new HR 372, I detect a nascent leaning toward the performance side of recreational sailing. This is reflected in the aft-cockpit configuration, the large wheel, the full-width mainsail traveler, and the fractional rig.
That isn’t to say that the new HR 372 breaks entirely from tradition. The boat is still unquestionably bluewater capable in that it offers robust construction, sizeable tankage, ample power, and long-haul stowage. The liveaboard interior still reflects the finest in Nordic design and workmanship.
However, designer Germán Frers decided not simply to modify the deck configuration of the center-cockpit sister ship, the HR 37; instead, he went back to the drawing board for a fresh approach. The end result exemplifies the subtle complexities of yacht design, for the two models weigh in with exactly the same displacement of 16,500 pounds. The 372 measures a scant inch more in length and only 2 more in beam. But the bow is sharper, the mid and aft sections flatter, and the transom fuller. This translates into a quicker, more responsive vessel with a decidedly sporty feel. The three-spreader fractional Seldén rig carries a generous 788 square feet of sail, rating a respectable SA/D of 17.6.
We had perfect test conditions for an offshore boat: a stiff 12 to 14 knots of wind over a 3-foot Chesapeake Bay chop. This gave us a real-world feel for how the boat tracks, how stiff it is, how easily it’s sailed shorthanded, and how the deck ergonomics and layout work.
The fine entry, freeboard, and bulwarks keep this a dry boat. The 372 stood up well to its canvas due to the combination of a notable 6,400 pounds of ballast carried in its 5-foot-7-inch shoal-draft keel. (A 6-foot-7-inch fin keel is also available.) We tacked smoothly through respectably tight angles holding a steady 7.1 knots. The helm was positive on a heel, and the vessel tracked well with no crankiness.
I feel that we’d have found more speed off the wind with the standard sail plan, but this particular boat had an optional self-tacking headsail. While it was certainly easy to handle, I think that the J measurement is too small to accommodate a nonoverlapping sail. Also, this configuration better suits a flush deck forward, as the raised track obstructed the deck flow and detracted from the boat’s otherwise elegant looks.
The T-shaped, aft-entry cockpit is divided by the full-width traveler, which runs athwart the cockpit seats just forward of the steering pedestal. This arrangement, coupled with end-boom sheeting, precludes a permanent cockpit table, but a light table with a mounting bracket lays stowed in the port cockpit locker. The decks, cockpit seats, and sole are covered with teak strips laid in silicone rubber. This is an attractive and efficient way to put nonskid on all walking and working areas.The windshield, to which a folding dodger can be neatly attached, is so attractive and practical that it’s a wonder it isn’t standard equipment on all cruising yachts. Another signature feature of the HR is the pair of large varnished surfaces to either side of the companionway and protected by the windshield. These act as chart tables or, because of their fiddles, as stowage trays.
The jib sheet runs to a winch on the cockpit coaming, readily at hand to the helmsman. The mainsheet, as with all the other running rigging, runs under a sea hood (or deck liner) to another set of winches just forward. This adds to the clean look and creates more usable deck space.
I did have some issues with the cockpit ergonomics. For example, the cockpit was aft entry only because there were no side gates, though if an owner wants them, the builder says they’re available. Yet the traveler spans coaming to coaming atop the side benches, obstructing the access forward. The LPG locker is located on the narrow swim platform aft. That wet environment aside, changing bottles while under way may prove a challenge.
Forward, the jib’s furling drum is mounted below the foredeck, giving the bow a clean, uncluttered look. The single, substantial anchor roller is offset to starboard. A large deck locker houses the anchor windlass and rode/chain.
The interior is simply stunning. The light mahogany cabinetry is finished in a soft matte varnish, offset with white ceiling panels. It’s roomy and flushed with natural light due to multiple hatches and deadlights. The joinery is superb, with all corners rounded for style and safety. The generous stowage lockers are all well ventilated via attractive louvering in the cabinet fronts.
The twin-cabin/single-head configuration is a practical use of space on a vessel of this size. An aft double cabin is offset to port. The sumptuous forward cabin has enormous stowage, hanging lockers, and a spacious V-berth. The head/shower to starboard near the entry is clean, bright, and practical.
The galley, enclosed for safety, is made for use at sea. It locates twin stainless-steel sinks, a gimbaled, stainless-steel two-burner stove, and high-capacity refrigeration among ample counter space and cleverly designed stowage spaces.
The main saloon is traditional, with a centerline table that opens to an L-shaped bench to port and a straight settee set to starboard. A full and actually usable navigation station is positioned just aft of that.
Of course, a vessel of this quality represents a serious investment in these challenging economic times. I believe that both the company and its customers would be well served by an offer of something more substantial than a one-year warranty.
In summary, aside from the ergonomic issues that I mentioned above, I found that the 372’s hull design, rig, construction materials and techniques, hardware, and overall fit and finish are superb. The boat is safe, strong, well powered, and well equipped. Aboard the HR 372, with the slip of a dock line, all the waters of the world are yours.
+46 (0) 304-54-800
View a photo gallery of the Hallberg-Rassy 372 here.
To read the original review of the HR 372 design, click here.
Mr Motoyuki Sato, the first Japanese to circumvent the globe in a catamaran: 'Every Sailor’s Dream To Sail Around The World’
If you’re impressed that Motoyuki Sato San came in as the first Japanese to sail around the world in a twin hull catamaran in 2014, get ready for more surprises as that is only the tip of one very big iceberg.
Mr Motoyuki Sato was born on 8 February 1956 in Hiroshima, Japan. He is the youngest child in a middle class family of five. Sato-san attended Hiroshima University and graduated with a Bachelor of Engineering. He is married to Chie Sato with no children. When he is not sailing around the world, he resides in Komaki, Aichi, Japan. Motoyuki Sato San retired on 31 January 2012 after a successful career.
From engineer to world class sailor
It all happened 35 years’ ago for this automotive Product Design Engineer who today not only sailed and visited over 40 exotic destinations around he world but is also a person who actually started a sailing club for his company (Tokai Rika)’s European office! Passion drew the engineer into his company sailing club in 1980 one day and his fascination with the many opportunities the world of sailing presented has not waned since.
Like most Japanese, Motoyuki Sato San has stayed with the same company all his working life. He continued sailing even when he was the General Manager stationed overseas in Detroit, USA, in the Netherlands and back again in the USA.
After his retirement from Tokai Rika in 2012, he immediately set to realise his lifelong dream to begin his world sailing adventure. Motoyuki Sato then flew to Hawaii and purchased a 43 foot long catamaran made in Saint Francis, South Africa. He named his catamaran ‘UMINEKO’ which in Japanese means Sea Cat.
“I wanted to realise my dream by not only talking about it but by actually doing it,” he says.
Starting his epic world circumventing sailing trip from Hawaii, on 30 March 2012, Motoyuki Sato grouped a few friends and set sail to Fanning Island, Samoa, Wallis Island and Fiji. From Fiji, he then sailed on to Vanuatu, Mackay, Bali, Christmas Island, Cocos Keeling Island, Mauritius, South Africa, St Helena, Brazil, Grenada, St Vincent, St Lucia, Martinique, St Martin, USA, Bahamas, Cuba, Panama, Marquesas Islands, Rangiora, Tahiti, Moorea, Bora Bora, Maupiti French Polynesia, Swarrow Island, Niue, Tonga and then back to Fiji on 6 May 2014.
Motoyuki Sato’s around the world sailing trip took him 2 years 1 month and 1 week to complete a total of 64,000 kilometres.
One can perhaps say he arrived at where he is today by taking things one at a time. The rugged and tanned 59 year old but looked more like a fit 40 year old Japanese man is a firm believer in trying out new things.
“Life is really short so you want to try and do the thing you are passionate about,” he offers.
That never-say-never spirit is illustrated throughout his schooling and working days and lives on with him to this day. An affable man, he was an avid sportsman and even earned a black belt in karate.
Motoyuki Sato was also one to constantly break from convention and do things that few Japanese has accomplished.
"It is about enjoying the journey and not focusing too much on the destination. You have to embrace it. If you wake up and you are passionate about what you do, I think that is success,” he said.
We salute Motoyuki Sato on being the first Japanese person to circumvent the world in a catamaran.
The arrival of the world's largest sailing yacht in Hong Kong has sparked fresh calls for the city to increase its investment in marine infrastructure.
Measuring almost 100 metres long and worth more than US$150 million, Eos called in for repairs after having trouble with its bow thruster while touring Southeast Asia.
The three-masted Bermuda-rigged schooner - owned by US media mogul Barry Diller - found room to berth at Hongkong United Dockyards (HUD) in Tsing Yi after failing to find suitable maintenance facilities for a boat of its size in the Philippines.
A former chairman of US media house Fox and worth about US$2.4 billion, Diller is married to fashion designer Diane Von Furstenberg.
Todd Jeffery, general manager of special projects at HUD, said Hong Kong needed additional investment to attract more vessels of that size .
"The problem is Hong Kong doesn't offer a lot of services or facilities for yachts of that size," Jeffrey said.
"There is no marina that could accommodate a boat that size … If a yacht owner can't find the facilities, there is no reason for them to come [to Hong Kong]."
Hong Kong's yacht owners and enthusiasts have long complained about a lack of berthing spots for their vessels.
The city is estimated to only have about 5,000 mooring spaces for its 15,000 fishing and leisure boats.
Jeffrey emphasised that there were benefits to the wider population - and not just the wealthy elite - from investing in marine infrastructure.
"It keeps jobs here. It improves the image of Hong Kong. These boats take on provisions and require repair work," he said.
"It brings a tremendous number of positives that aren't realised by the general public."
A spokesperson for the Marine Department said the government had granted permission for nearly 1,900 new moorings in 41 designated areas at the end of last year.
The 1,500-tonne Eos arrived earlier this month, and is due to set sail again on Tuesday.
Built Bremen, Germany
Length 93 metres
Speed 16 knots
Weight 1,500 gross tons
Price More than US$150 million
This article appeared in the South China Morning Post print edition as Marine upgrades urged to attract luxury yachts
Princess Yachts at Penang lifestyle show Princess Yachts will be the centre point at Nautical Lifestyle 2014, held at the Straits Quay Retail Marina in Penang (November 21-24, 2014)
A major trading post for more than a century, Penang is off the northwestern coast of Malaysia that has retained its rich multicultural history. George Town, its capital, was listed as a UNESCO World Heritage Site in 2008.
Penang is also known as a “foodies’ paradise” around Asia because of its culinary originality and diversity.
The Nautical Lifestyle event kicked off with a Princess VIP Cocktail Party and a Yacht Dance Parade.
The Nautical Lifestyle Event also serves an extremely good cause, raising funds for underprivileged children of Living Hope Global. Princess Yachts guests were invited to join the auction for charity at the Cocktail Party.
Visitors were able to see the largest line-up of luxurious Princess Yachts ever assembled in Penang and have the opportunity to charter a yacht for a short cruise to contribute to charity.
The main feature was a Charity Convoy Cruise around the sights of Penang. On November 26, the Princess Fleet set sail for a leisurely Convoy Cruise to Phuket, passing the stunning islands of the Andaman coast.
Guests motor up to Langkawi then Koh Lipe, renowned for its clear waters and fantastic snorkeling.
There were opportunities to stop at other beautiful islands including Koh Rok Nok, Koh Muk, Ko Lanta and Phi Phi before arriving in Phuket for the Princess Service Training Week (December 1-5) and the Princess Rendezvous Party Night on December 5. - Phuket News
Singapore businessman Adrian Lee Chye Cheng, 33, is the super-yacht industry’s dream come true.
Young, wealthy and passionate about boats, he embodies an emerging market that shipyards and brokers see looming large on the horizon.
“The new market is in Asia,” Lee said in an interview on one of the panoramic decks of the Ocean Paradise, a 55-meter luxury yacht he and his brother Lionel acquired two months ago.
Wealth among Asia-Pacific millionaires may top North America’s as soon as next year, according to a report published last month by Cap Gemini SA and Royal Bank of Canada. Asians with at least $1 million in investable assets are set to see their riches climb to $15.9 trillion by 2015 from $12 trillion last year, the 2013 Asia-Pacific Wealth Report says. North American high net-worth individuals held $12.7 trillion in 2012.
With rising riches has come an appetite for expensive toys. Take Lee’s yacht. With a charter price of $300,000 a week, the Ocean Paradise was custom-built by Benetti for 34 million euros ($46 million). It was being promoted at last week’s Monaco Yacht Show -- one of the most important in the world for the biggest luxury boats -- as a “world of cool.” It has a jacuzzi, a Zen garden, floor-to-ceiling windows, mood lighting, a carbon-fiber dining table and a vintage Space Invaders video game.
Lee’s purchase is seen as a harbinger of future sales for an industry more associated with billionaires from the U.S., Europe -- especially Russia -- and the Middle East.
The biggest regional growth in terms of the number of super-yachts delivered last year was in Asia, according to the latest available figures from brokerage Camper & Nicholsons.
“The yacht industry is very peculiar; it’s something you have to learn, understand and feel,” Lee said. “You wouldn’t go out and buy a yacht if you don’t know enough. I’ve seen people buy a Ferrari on impulse or go to an air show and like a plane and just buy it. A yacht takes more time.”
Shipbuilders and brokers in Monaco concurred. The Asian market for super-yachts, loosely defined as boats stretching more than 24 meters, is one that, although slow to cultivate, will have huge potential amid a boom in high-net-worth individuals. The biggest prize will be China, they said.
“Southeast Asia and China are becoming more and more important, although China isn’t developing as fast as everyone was hoping,” Fabio Ermetto, chairman of brokerage Fraser Yachts, said in an interview. “There’s a feeling that in the next couple of years we’ll get more and more clients who’ve never owned any kind of boat before and will invest in a new super-yacht.”
This wasn’t the case for Lee. Ocean Paradise is an upgrade from Lee’s previous boat, the 37-meter Ocean Dream, which he sold in 2010.
An executive director of Loyz Energy Limited, a Singapore-based oil and natural gas explorer, Lee is also on the board of restaurant-operator and caterer Select Group Limited, where he represents closely-held Jit Sun Investments, according to the company’s websites. His brother Lionel helps run oil-services company Ezra Holdings that provides vessels and installs deep-sea equipment for the offshore industry.
The brothers are also directors of Raimon Land Pcl, a Thai builder of luxury condominiums and resorts in Bangkok and Phuket. Giving the Ocean Paradise a contemporary look -- with a black-and-white theme, a blob-shaped sofa and a river-stone setting for the bathtub in the master cabin -- was inspired by the brothers’ boutique hotel, restaurant and condo holdings, Adrian said. He hopes the yacht will gain “icon” status.
Out of the 169 super-yachts delivered in 2012, the regions of 141 owners were identified, according to the widely-tracked Camper & Nicholsons’ study. About a third came from Europe.
The biggest growth was in Asia, where 11 percent were delivered last year compared with 3 percent in 2011, it said. Of the 125 owners’ nationalities identified, 14 percent were Americans, followed closely by Russians.
Those from Hong Kong and mainland China came in seventh and eighth with a total of about 9 percent of deliveries.
“We’re on the cusp of the Chinese infiltrating the market,” said Peter Thompson, a partner at brokerage Worth Avenue Yachts, who was showing yachts to clients at the Monaco show. “It’s in its infancy. There is an enormous amount of money but the guys who made it are very careful with it.”
He cited an example of a Macau casino owner in his eighties who is “hesitating about buying a boat.”
“I think if he was American he would just go for it,” Thompson said.
Among issues facing Asian yacht owners is a shortage of mooring space at the region’s marinas, and in the case of China, an absence of “legal status for the yachts along the coastline,” he said.
Lee says he hasn’t decided yet whether the Ocean Paradise will remain in the Mediterranean Sea and the Caribbean on charter or go to Asia. If the price is right, he says he may even sell the boat in spite of the three years of work with Benetti overseeing construction and design.
At the time of the Monaco trade show, Lee said he had spent all of two full days aboard and has been too hard at work to invite friends to celebrate her launch.
Would people in his parents’ generation have invested in the same way?
“I don’t think so,” he said. “It’s a lot of work to build a boat.” - Bloomberg
At about $50 a barrel, crude oil prices are down by more than half from their June 2014 peak of $107. They may fall more, perhaps even as low as $10 to $20. Here’s why.
U.S. economic growth has averaged 2.3 percent a year since the recovery started in mid-2009. That's about half the rate you might expect in a rebound from the deepest recession since the 1930s. Meanwhile, growth in China is slowing, is minimal in the euro zone and is negative in Japan. Throw in the large increase in U.S. vehicle gas mileage and other conservation measures and it’s clear why global oil demand is weak and might even decline.
At the same time, output is climbing, thanks in large part to increased U.S. production from hydraulic fracking and horizontal drilling. U.S. output rose by 15 percent in the 12 months through November from a year earlier, based on the latest data, while imports declined 4 percent.
Something else figures in the mix: The eroding power of the OPEC cartel. Like all cartels, the Organization of Petroleum Exporting Countries is designed to ensure stable and above-market crude prices. But those high prices encourage cheating, as cartel members exceed their quotas. For the cartel to function, its leader -- in this case, Saudi Arabia -- must accommodate the cheaters by cutting its own output to keep prices from falling. But the Saudis have seen their past cutbacks result in market-share losses.
So the Saudis, backed by other Persian Gulf oil producers with sizable financial resources -- Kuwait, Qatar and the United Arab Emirates -- embarked on a game of chicken with the cheaters. On Nov. 27, OPECsaid that it wouldn't cut output, sending oil prices off a cliff. The Saudis figure they can withstand low prices for longer than their financially weaker competitors, who will have to cut production first as pumping becomes uneconomical.
What is the price at which major producers chicken out and slash output? Whatever that price is, it is much lower than the $125 a barrel Venezuela needs to support its mismanaged economy. The same goes for Ecuador, Algeria, Nigeria, Iraq, Iran and Angola.
Saudi Arabia requires a price of more than $90 to fund its budget. But it has $726 billion in foreign currency reserves and is betting it can survive for two years with prices of less than $40 a barrel.
Furthermore, the price when producers chicken out isn’t necessarily the average cost of production, which for 80 percent of new U.S. shale oil production this year will be $50 to $69 a barrel, according to Daniel Yergin of energy consultant IHS Cambridge Energy Research Associates. Instead, the chicken-out point is the marginal cost of production, or the additional costs after the wells are drilled and the pipes are laid. Another way to think of it: It's the price at which cash flow for an additional barrel falls to zero.
Last month, Wood Mackenzie, an energy research organization, foundthat of 2,222 oil fields surveyed worldwide, only 1.6 percent would have negative cash flow at $40 a barrel. That suggests there won't be a lot of chickening out at $40. Keep in mind that the marginal cost for efficient U.S. shale-oil producers is about $10 to $20 a barrel in the Permian Basin in Texas and about the same for oil produced in the Persian Gulf.
Also consider the conundrum financially troubled countries such as Russia and Venezuela find themselves in: They desperately need the revenue from oil exports to service foreign debts and fund imports. Yet, the lower the price, the more oil they need to produce and export to earn the same number of dollars, the currency used to price and trade oil.
With new discoveries, stability in parts of the Middle East and increasing drilling efficiency, global oil output will no doubt rise in the next several years, adding to pressure on prices. U.S. crude oil production is forecast to rise by 300,000 barrels a day during the next year from 9.1 million now. Sure, the drilling rig count is falling, but it’s the inefficient rigs that are being idled, not the horizontal rigs that are the backbone of the fracking industry. Consider also Iraq’s recent deal with the Kurds, meaning that another 550,000 barrels a day will enter the market.
While supply climbs, demand is weakening. OPEC forecasts demand for its oil at a 14-year low of 28.2 million barrels a day in 2017, 600,000 less than its forecast a year ago and down from current output of 30.7 million. It also cut its 2015 demand forecast to a 12-year low of 29.12 million barrels.
Meanwhile, the International Energy Agency reduced its 2015 global demand forecast for the fourth time in 12 months by 230,000 barrels a day to 93.3 million and sees supply exceeding demand this year by 400,000 barrels a day.
Although the 40 percent decline in U.S. gasoline prices since April 2014 has led consumers to buy more gas-guzzling SUVs and pick-up trucks, consumers during the past few years have bought the most efficient blend of cars and trucks ever. At the same time, slowing growth in China and the shift away from energy-intensive manufactured exports and infrastructure to consumer services is depressing oil demand. China accounted for two-thirds of the growth in demand for oil in the past decade.
So look for more big declines in crude oil and related energy prices. My next column will cover the winners and losers from low oil prices.
To contact the author on this story:
A Gary Shilling at email@example.com
The tech guru whose predictions are closely followed by Silicon Valley luminaries has some thoughts about what to expect in 2015.
No one does predictions like Mark Anderson, whose forecasts about the intersection of the economy and technology are closely followed in Silicon Valley. He has a global view of what’s the next big thing and place along an eye for hot products and countries that about to take a dive. Anderson is head of Strategic News Service, a newsletter publisher for industry leaders and venture capitalists. It claims a readership that includes Dell CEO, Michael Dell, Tesla CEO Elon Musk and Microsoft’s Bill Gates. Recently, Mark Anderson listed his predictions for 2015 during a gathering in San Francisco. Here are his key points:
In the wake of the 2008 market crash, a growing number of individual investors jumped into currency trading under the impression that it was a safer bet than stocks. On Thursday, investors learned just how wrong they were.
It must have seemed like a funny idea.
Three years ago, online brokerage firm Interactive Brokersran a commercial mocking the Occupy Wall Street movement. The animated commercial featured figures protesting the New York Stock Exchange “Occupy-style” with signs demanding lower commissions. The commercial’s tag line: “Interactive Brokers, Join the 1%.”
In an unfortunate twist of fate, it looks like a lot of Interactive Brokers’ clients have joined the poor house. On Friday, the online trading firm, which allows individuals to place bets on currency moves and other investments, announced that “several” of its clients’ accounts had been completely wiped out by the jump in the Swiss Franc on Thursday, creating huge losses for anyone betting against the currency. Betting that the Swiss Franc would fall had become a popular bet that was considered safe. This week’s events have left the firm on the hook for $120 million in losses.
And Interactive Brokers’s clients weren’t even the worst hit. FXCM, the U.S.’s largest online brokerage for retail foreign currency trading, said many of its clients had been wiped out in the markets on Thursday as well. The firm said it was owed $225 million by clients who had lost everything in this week’s volatile currency markets. Both Interactive and FXCM focused on individual investors. U.K. brokerage IG Group said it had nearly $50 million in losses and was shutting down. Two other firms said they were closing their doors as well.
In the past few years, in the wake of the 2008 market crash, a growing number of individual investors have jumped into currency trading under the impression that it was a safer bet than stocks. On Thursday, when the Euro, the Dollar, and other currencies fell nearly 20% in one day versus the Swiss Franc, those investors learned just how wrong they were.
In January 2014, Citigroup released a report documenting the rising popularity of investing in currencies among individual investors, often called forex or FX trading, for foreign exchange. The Citi report said that the average daily volume of retail trading in one large FX market had doubled to 20% of the total market in 2012, or $400 billion in trades, from just over 10% in 2008.
The report estimated that the growing horde of retail FX traders, which it estimated at 4 million, were mostly male at an average age of 35. And most were small-time players. The average individual who was trading currencies in the U.S. had just $6,600 in their account.
But most believed their accounts were set to grow. The report cited a recent poll that had found that 84% of retail traders in the FX market believed they could make money during most months. In truth, the report said, only about 30% of individual investors make money trading currencies.
FXCM FXCM was one of the fastest growing firms that catered to individual investors interested in the currency market. In fact, Barron’s had referred to the firm as a “fast growing money machine.” The firm handled $1.4 trillion in trades by individuals in the last quarter, and had become the biggest online currency brokerage for retail investors, with over 230,000 accounts at the end of last year.
FXCM never promised its clients riches, but, at times, the company and its CEO appeared to play down the risks of swapping the Swiss Franc, say, for Polish Zlotys. In May 2013, FXCM’s CEO Drew Niv, who co-founded the company in 1999, told Bloomberg TV that currencies were no more risky than stocks or other assets. And FXCM ran a website DailyFX that sought to teach individuals how to make money in the currency market. A tab on the top of its website is titled “DailyFX for Beginners.” On Friday, there was no mention on the website of FXCM’s huge losses.
In December, Niv told Bloomberg Market’s magazine that leverage and the ability to trade more money than investors had on hand had drawn a lot of interest in the currency market from retail investors. “Currencies don’t move that much,” he told Bloomberg Markets. “So if you had no leverage, nobody would trade.”
Most of the clients that traded with FXCM lost money. Nearly 70% of FXCM’s client accounts lost money in 2014, according to a disclosure the company made with the CFTC. In 2013, FXCM paid Niv nearly $1.5 million in salary and non-stock incentive bonuses. Now, the company looks to be on the brink of failing. FXCM’s stock, which had been trading at around $11 on Wednesday evening, plunged 92% into the pennies in pre-market trading on Friday morning. The SEC halted trading in the stock, and it never opened on Friday. On Friday, FXCM secured $300 million in financing from Leucadia National to keep the currency trading firm afloat. “We are pleased to continue to act as the leading online provider of foreign exchange trading and related services to retail and institutional customers worldwide,” Niv said in an official statement from FXCM.
Interactive Brokers IBKR had also drawn many individual investors into the currency market. It was known for its often funny, and at times controversial, commercials. In 2012, Interactive Brokers’ founder, the Hungary native Thomas Peterffy, spent $8 million on ads urging people to vote Republican. In the ad, Peterffy said, “I grew up in a socialist country, and I have seen what that does to people.” On Friday, Interactive Brokers said the $120 million in client losses that it might have to cover amounted to less than 3% of the company’s assets. By late Friday, its shares were down by 1% to just under $28. Interactive Brokers did not immediately respond to a request for comment fromFortune.
The turmoil caused by Swiss Franc this week did deliver a few winners. Gain Capital, a Bedminster, N.J.-based currency brokerage firm, said that it made money on Thursday. Two years ago, FXCM had offered $210 million to buy Gain. Gain’s leadership rejected the bid. In retrospect, it looks like that was a very good move. - Fortune
The Swiss franc has soared as much as 30% in chaotic trade after the central bank abandoned the cap on the currency's value against the euro.
The Swiss National Bank (SNB) said the cap, introduced in September 2011, was no longer justified.
At the same time it reduced a key interest rate from -0.25% to -0.75%, increasing the amount investors have to pay to hold Swiss deposits.
Following the SNB move the Swiss franc went from 1.20 to the euro to 0.8052.
It later recovered in mid-morning trade close to 1.05.
Swiss shares fell some 6% and stock markets around Europe fell with investors buying "safe haven" assets such as gold and German bonds.
Many investors believe that with the franc so strong Swiss companies will struggle to win exports.
Watchmaker Swatch saw its share price slump 15%. Swatch chief executive Nick Hayek called the decision "a tsunami" for Switzerland's economy.
Mark Haefele, chief investment officer of Swiss bank UBS, estimated that the move would cost Swiss exporters close to 5bn Swiss francs (£3.3bn), equivalent to 0.7% of Swiss economic output.
One trader described trading after the unexpected announcement as "carnage".
While the Swiss franc was held at 1.20 to the euro it tracked the euro's fall against the dollar.
ECB actionMany believe the euro will fall even further if the European Central Bank (ECB) starts quantitative easing, buying bonds to push cash into the eurozone banking system to stimulate a recovery.
Chris Beauchamp, market analyst at IG said: "My initial reaction was that it is a sign the ECB is about to do something, which makes it odd that the reaction has been so negative across European stocks.
"However, it's not every day that a central bank pulls the rug out from underneath something in such a massive way, and clearly people are worried that there's something bigger afoot."
Keeping the franc at 1.20 to the euro had became increasingly expensive for the SNB as it sold its own currency and bought up euros, sterling, US and Canadian dollars and yen, usually in the form of government bonds.
SNB foreign currency reserves have more than doubled since the cap was started in 2011 making it one of the five largest holders of foreign reserves in the world. - BBC
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