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25 October 2012
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  Top Stories 
 
  • Fed promises to stick with stimulus efforts
    The Federal Reserve's Open Market Committee said it will continue stimulus efforts, saying the U.S. economic recovery is too weak to significantly reduce unemployment without help from the central bank. "The committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the committee said. The New York Times (tiered subscription model) (24 Oct.) LinkedInFacebookTwitterEmail this Story
  • Barclays hearing might prove crucial for future Libor cases
    In a preliminary hearing, Barclays will face a claim for damages from a care-home operator that alleges mis-selling of swaps by the bank because of manipulation of the London Interbank Offered Rate. Thousands of small U.K. companies think they were mis-sold swaps, and a ruling against Barclays could open the floodgates. Monday's hearing will determine whether the allegation has enough merit to go to trial. Reuters (24 Oct.) LinkedInFacebookTwitterEmail this Story
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  Reader Survey 
  • What do you expect to be the primary driver of equity-market returns during the next 12 months?
    Economic news  32.45%
    Corporate earnings  28.56%
    Central bank policies  23.43%
    Geopolitics  15.56%
  • Poll analysis: Whereas global equity-market returns have been driven largely by central bankers and geopolitics since the 2008 collapse of Lehman Brothers, respondents to this week's poll expect monetary policy and geopolitics to have a diminished influence on stock prices in the next 12 months. Nearly one-third of the 1,131 respondents expect economic news to be the primary driver of equity prices, with corporate earnings the second-most-favored response. Both Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi have limited additional means at their disposal to further stimulate the "animal spirits" of investors, and thus it is not surprising that a majority of investors will be taking their cues from economic activity and corporate profit. While the U.S. economy has seen some signs of modest strengthening, particularly in the areas of housing and employment, and recent reports suggest that the Chinese economy may be stabilizing, much of Europe remains mired in a recession. And disappointing third-quarter earnings reports and lowered forecasts from bellwethers such as Caterpillar, DuPont, and United Parcel Service are a reflection of the global economic weakness. The recent market sell-off may well be the result of investors' renewed focus on fundamentals. -- David T. Larrabee, Content Director, CFA Institute LinkedInFacebookTwitterEmail this Story
  Market Activity 
 
  • Financial advisers prefer bond ETFs for liquidity, not price
    Fixed-income exchange-traded funds offer inexpensive exposure to bonds, but that's not the main reason financial advisers recommend them, according to a survey by Guggenheim Investments. More than 70% of advisers said liquidity and convenience are the biggest advantages bond ETFs have over holding bonds directly or in mutual funds. InvestmentNews (free registration) (24 Oct.) LinkedInFacebookTwitterEmail this Story
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  Economics 
  • Thousands of employees are fired worldwide as sales slide
    Dow Chemical and Ford Motor have joined a long list of companies firing workers by the thousands worldwide as Europe's recession and sluggish growth in the U.S. depress sales. Since Sept. 1, North American companies have unveiled plans to eliminate 62,600 jobs globally. Bloomberg (25 Oct.) LinkedInFacebookTwitterEmail this Story
  • Brazil's goal of low interest rates challenges banks
    Brazil's high interest rates have been a boon for banks for years, but with the government working toward a low-rate environment, banks' profit is starting to come under pressure, according to The Economist. "The good news is that Brazilian banks have lots of fat to cut before they reach the bone," the magazine notes. The Economist (20 Oct.) LinkedInFacebookTwitterEmail this Story
  • Household debt threatens Canadian economy, central bank says
    The Bank of Canada said high household debt is the "biggest domestic risk" to the economy. "It is possible that the elevated level of household debt is beginning to induce a more cautious attitude," the central bank said in its quarterly Monetary Policy Report. Consumer debt in Canada is at a record 165.8% of disposable income, higher than the amount in the U.S. before the property bubble burst. Bloomberg (24 Oct.) LinkedInFacebookTwitterEmail this Story
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  Geopolitical/Regulatory 
  • Basel official defends regulatory complexity as necessity
    Complexity is a necessary part of Basel III banking rules, which cannot be reduced to a simple formula and must not be discarded, said Wayne Byres, secretary general of the Basel Committee on Bank Supervision. He also said debt limits shouldn't be regarded as a panacea. "Despite its apparent simplicity, an internationally comparable leverage ratio is anything but simple to design," Byres said. Financial Times (tiered subscription model) (24 Oct.), Reuters (24 Oct.), Bloomberg (24 Oct.) LinkedInFacebookTwitterEmail this Story
  • Plan for forex-swaps exemption is expected after election
    A plan by the U.S. Treasury Department to exempt foreign exchange swaps from rules will be presented after the Nov. 6 election, a banking industry source said. The plan was supposed to be finalized by an Oct. 13 deadline for swaps-dealer registration. "I think that we have reason to expect that the Treasury will act before the end of the year," the unidentified source said. "We also have reason to believe they will act with consistency to what they proposed last year." Reuters/Financial Regulatory Forum blog/Thomson Reuters Accelus (24 Oct.) LinkedInFacebookTwitterEmail this Story
  Financial Products 
  • SSgA debuts 2 ETFs focused on modified S&P 1500 indexes
    State Street Global Advisors is bringing to NYSE Arca two exchange-traded funds linked to Standard & Poor's 1500 indexes that have been modified to pursue enhanced-beta strategies. The SPDR S&P 1500 Value Tilt ETF is linked to the S&P 1500 Low Valuation Tilt Index, which overweights stocks with low market valuation and underweights stocks with high valuation. The SPDR S&P 1500 Momentum Tilt ETF tracks the S&P 1500 Positive Momentum Tilt Index, which overweights high-momentum stocks and underweights low-momentum stocks. IndexUniverse.com (24 Oct.), Benzinga.com (24 Oct.), Institutional Investor online (24 Oct.) LinkedInFacebookTwitterEmail this Story
  Ethics 
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