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17 December 2012
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  Top Stories 
 
  • New Japanese premier faces economy and China
    Shinzo Abe, whose Liberal Democratic Party won Japan's national elections by a landslide, immediately faces challenges from the struggling economy and tense relations with China. The party has promised a major spending program and loose monetary policy to stimulate economic growth. Projections indicate that the LDP and ally New Komeito party will have enough votes in the lower chamber of parliament to overrule any opposition from the upper chamber. Reuters (17 Dec.), Nikkei.com (Japan) (17 Dec.), NHK World (Japan) (16 Dec.) LinkedInFacebookTwitterEmail this Story
  • "Fiscal cliff" talks start to produce some progress
    President Barack Obama and U.S. House Speaker John Boehner remain far apart but there are signs of some movement in their "fiscal cliff" talks. Boehner indicated support for a tax increase on people with incomes of more than $1 million and a total of $1 trillion in new revenue over the next decade, in return for $1 trillion of spending cuts. Boehner backed an increase in the national debt limit that would put the issue on the back burner for a year. Google/The Associated Press (16 Dec.), Reuters (17 Dec.), Bloomberg (16 Dec.) LinkedInFacebookTwitterEmail this Story
  • Buyout leverage rises to pre-financial crisis levels
    Over the last six months, the amount of their own money private-equity firms put into buyouts has fallen to 33%, close to the 30% average in 2007 before the financial crisis. Since 2008, the average has been 42%. A dramatic increase in leverage can bring with it an increase in the risk of default. The Wall Street Journal (16 Dec.) LinkedInFacebookTwitterEmail this Story
  • China lifts $1B cap on investment by foreign SWFs, central banks
    China's State Administration of Foreign Exchange dropped the $1 billion limit on investments by foreign central banks and sovereign wealth funds. The revised regulations said nothing about any new investment cap for these investors. The $1 billion limit remains in place for other types of institutional investors, the agency said. Bloomberg (16 Dec.) LinkedInFacebookTwitterEmail this Story
  • U.S. college savings plans come up short on transparency
    The 529 plans many American families depend on for tax-free savings to be applied to higher education offer little transparency, something the Municipal Securities Rulemaking Board is trying to remedy by compiling a readily accessible performance database. "The MSRB wants to ensure that 529-plan investors have the information necessary to make informed decisions -- especially for something as vital as saving for a child's education. A comprehensive database of 529-plan information will help us achieve this goal," said MSRB Chairman Jay Goldstone. The Wall Street Journal (14 Dec.) LinkedInFacebookTwitterEmail this Story
  • How JPMorgan unwound the "London whale" trade
    JPMorgan Chase lost a bundle on the trades placed by the "London whale," but few people know how the bank eventually unwound the trade. JPMorgan turned to hedge fund BlueMountain Capital Management, which was co-founded by Andrew Feldstein, a former JPMorgan banker and credit derivatives expert. BlueMountain unwound the trade over several weeks by buying protection on CDX IG 9, the index at the center of the bank's precarious position, thus offsetting JPMorgan's existing bets and then selling them on to the bank. Financial News Online (U.K.) (subscription required) (17 Dec.) LinkedInFacebookTwitterEmail this Story
 Morningstar Direct White Paper in CFA Institute Selections Newsletter
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  Market Activity 
  • Asian-Pacific markets mixed but Nikkei hits 8-month high
    Asian-Pacific markets were mixed Monday but Japan's Nikkei 225 closed up 0.9% at 9,828.88, its highest reading in eight months, after elections that returned Shinzo Abe to power as prime minister. China's Shanghai Composite rose 0.5%. Hong Kong's Hang Seng Index declined 0.4%. Australia's S&P/ASX 200 edged down 0.2%. South Korea's Kospi gave up 0.6%. India's Sensex was down 0.4% at midafternoon. The Wall Street Journal (17 Dec.), The Economic Times (India) (21 Dec.) LinkedInFacebookTwitterEmail this Story
  • AIG could raise $6.5B from AIA stock offering in Hong Kong
    American International Group, the insurance holding company that was bailed out by U.S. taxpayers in the financial crisis, aims to raise as much as $6.5 billion in an an offering of 1.65 billion shares of the insurance company AIA Group in Hong Kong, according to a term sheet seen by Bloomberg News. AIA notified the Hong Kong stock exchange that AIG had begun selling "a significant proportion" of its 13.7% stake in the Hong Kong-based insurance company. Bloomberg (16 Dec.) LinkedInFacebookTwitterEmail this Story

Investment professionals are cautiously optimistic about the global economy in 2013, but ethical culture within financial firms needs to be addressed. Click here to view and download the full report.
  Economics 
  • Tax-refund delays could be enough to send U.S. into recession
    If it takes too long to head off the "fiscal cliff," the Internal Revenue Service may be forced to push tax refunds into the second quarter as taxpayers hold off filing their returns, potentially taking more than $200 million out of the pockets of consumers in the second quarter. If even $100 million of refunds are delayed, that could cut retail spending and send the U.S. economy into recession. Barron's (subscription required) (15 Dec.) LinkedInFacebookTwitterEmail this Story
  • Falling immigration and birthrate put pressure on U.S. finances
    America's policymakers once took comfort in the knowledge that the nation's workforce was growing but with the decline in immigration and the birthrate, those days are over and the consequences could be grave, according to The Economist. "For politicians struggling over the deficit, these trends point to some remedies," the magazine notes. "One would be gradually to raise the eligibility age for Social Security and Medicare over coming decades, encouraging Americans to work longer. Another would be to allow more immigration." The Economist (15 Dec.) LinkedInFacebookTwitterEmail this Story
  Geopolitical/Regulatory 
  • UAE responds to bank worries, postpones new rules
    Responding to banks' complaints of insufficient time to meet the deadline, the central bank of the United Arab Emirates is delaying liquid-asset requirements and implementation of limits on banks' exposure to state-linked debt. Given the fact that companies with state ties lead a large part of UAE's development, the measures also could have crimped overall national growth. Reuters (16 Dec.) LinkedInFacebookTwitterEmail this Story
  Financial Products 
  • SRI Investment Services to promote ethical fund of funds
    SRI Investment Services will promote the Eden SRI Balanced Open-ended Investment Company, set to come to the market in January. Paul Warner, managing director of Minerva Fund Managers, will run the ethical fund of funds. The fund will invest in corporate bonds and equity funds with a target yield of 3% per year. IFAOnline.co.uk (U.K.) (13 Dec.) LinkedInFacebookTwitterEmail this Story
  Editor's Note 
  • Clarification
    The Dec. 13 edition of CFA Institute Financial Newsbrief included a summary detailing how financial advisers expect assets under advisement to increase 8.4% next year. The source article for that item has since been updated to clarify that financial advisers expect return on assets under advisement to increase 8.4% in 2013. LinkedInFacebookTwitterEmail this Story
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