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04 October 2012
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  Top Stories 
  • Greece reportedly expects more aid soon
    Greece expects to receive more bailout money by the end of this month, with the support of its lenders, known as the troika, Finance Minister Yannis Stournaras told the German newspaper Bild. "We are on a good path," he said. "I expect the troika report by mid-October. And I am very optimistic that Greece will get fresh money from the last package by the end of October." Reuters (03 Oct.), Market News International (03 Oct.), Google/Agence France-Presse (03 Oct.) LinkedInFacebookTwitterEmail this Story
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  Reader Survey 
  • Is Germany, Finland and the Netherlands' objection to using the European Stability Mechanism's bailout money to purchase existing bad loans appropriate?
    Yes  71.94%
    No  28.06%
  • Poll analysis: This week, we asked readers, "Is Germany, Finland, and the Netherlands' objection to using the European Stability Mechanism's bailout money to purchase existing bad loans appropriate?" More than 70% of 784 respondents said these nations' objection is appropriate. Each objecting nation sees the ESM as a negotiating lever to ensure that troubled eurozone nations implement conservative fiscal policies and that troubled banks rebuild the sanctity of their capital structures. In other words, bailout money is to be used as a final option once all other measures are exhausted. Yet, because money is fungible, this preference is essentially a long-dated call option on the success of austerity and capital rebuilding. Today's avoided bailout might result in a larger future bailout if austerity and capital rebuilding not only fail but also exacerbate problems of economies already registering record contraction and unemployment. Germany, Finland and the Netherlands seem confident that such a failure will not happen. In any case, implementation of the ESM has problems in many of the same areas as the eurozone, such as the mechanism by which fiscal policies can be coordinated, conditions that would cause member nations to be responsible for other members' economic problems and so forth. -- Jason A. Voss, CFA, Content Director, CFA Institute LinkedInFacebookTwitterEmail this Story
  Market Activity 
  • Most Asian-Pacific markets advance with Japan leading gains
    Most Asian-Pacific markets rose Thursday as a softening yen gave Japanese automakers a boost, more than making up for losses by energy companies. Japan's Nikkei 225 gained 0.9%. Hong Kong's Hang Seng Index edged up 0.1%. Australia's S&P/ASX 200 rose 0.3%. India's Sensex was up 1% shortly after midday. Bucking the trend, South Korea's Kospi slid 0.2%. Mainland China exchanges remained closed for the Golden Week holidays. MarketWatch (04 Oct.), (India) (04 Oct.) LinkedInFacebookTwitterEmail this Story
  • Portuguese agency exchanges 2013 bonds for 2015 debt
    Portugal's debt agency, IGCP, successfully exchanged bonds that mature in 2013 for securities due in 2015. The move reduced repayment obligations next year. "If we see this exchange as a market test, I'd say that Portugal passed," said Filipe Silva, who manages securities at Banco Carregosa. Bloomberg Businessweek (03 Oct.) LinkedInFacebookTwitterEmail this Story
  • Slowdown in China alters commodity markets
    Commodities investors used to do well by just getting into whatever China needed. However, now that China is buying less, investors have to parse what is going to make them money regardless of what happens in China or get out of commodities altogether. The Wall Street Journal (03 Oct.) LinkedInFacebookTwitterEmail this Story
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  • Van Rompuy presses for EU budget controls with more teeth
    European Council President Herman Van Rompuy wants EU members to back budget-coordination measures with more teeth to enforce them. In return for eurozone governments handing some budgetary power to the EU, member states would be offered assistance when an economic downturn puts their finances under stress, according to a draft report prepared for an EU summit. (Brussels) (subscription required) (03 Oct.), Reuters (03 Oct.) LinkedInFacebookTwitterEmail this Story
  • Poll: Economists favor Obama's policies by wide margin
    According to a poll by The Economist, business and academic economists favor policies of U.S. President Barack Obama over those of Republican challenger Mitt Romney by a substantial margin. They also think Obama would appoint a better economic team after the election. "They do not hold the perpetually disappointing recovery against him; half of respondents graded his record as good or very good, compared with just 5% who said that about George Bush in our poll four years ago," according to the magazine. The Economist (06 Oct.) LinkedInFacebookTwitterEmail this Story
  • FPA gets serious about pursuing young financial advisers
    With the average age of members at 52, the Financial Planning Association is getting more aggressive about recruiting young financial advisers. To attract younger members, the group created 22 student chapters across the U.S. "We really want to make a connection [between] those who are in the profession and those who are going to be," President-elect Michael Branham said. InvestmentNews (free registration) (01 Oct.) LinkedInFacebookTwitterEmail this Story
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  • CFTC faces deluge of requests to delay or ease rules
    Several derivatives rules are scheduled to go into effect next week, prompting trade groups to ask the Commodity Futures Trading Commission and other regulators to either delay or ease the measures. For example, market participants want regulators to determine whether currency derivatives are subject to the rules. Bloomberg Businessweek (04 Oct.) LinkedInFacebookTwitterEmail this Story
  • Law is needed for economic crime, U.K. Labor says
    The U.K. Labor Party wants to see an economic-crime law. Shadow Home Secretary Yvette Cooper said such a law would make it easier to bring people to justice. "Look at the [London Interbank Offered Rate] scandal that emerged this summer: It is a multibillion-pound fraud," Cooper said. "People were fiddling figures to get rich, while small businesses paid the price. Yet no one has been arrested." The Guardian (London) (02 Oct.), Bloomberg Businessweek (03 Oct.), Financial Times (tiered subscription model) (02 Oct.) LinkedInFacebookTwitterEmail this Story
  • France plans to move forward with ring-fencing banks
    French Finance Minister Pierre Moscovici said the government aims to write legislation that would separate investment banking from retail banking by year-end. Such ring fencing was a core pledge of President Francois Hollande during his election campaign. Reuters (03 Oct.) LinkedInFacebookTwitterEmail this Story
Asset Allocation in a Non-Normal World
Peng Chen, CFA Chief Executive Officer, Asia (ex-Japan) Dimensional Fund Advisors

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  Financial Products 
  • Dark pool is fined $800,000 by SEC for releasing client data
    The Securities and Exchange Commission fined dark-pool operator eBX $800,000 for failing to protect clients' confidential data and making the information available to another firm. Customers of trading system Level ATS were told their buy and sell orders would be kept confidential, but eBX allowed an outside technology company to use the information for "its own purposes," the SEC said. Reuters (03 Oct.), MarketWatch (03 Oct.) LinkedInFacebookTwitterEmail this Story
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