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18 October 2012
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  Top Stories 
  • Study: Eurozone exit by southern states would spur global recession
    Global gross domestic product would plunge by $22.3 trillion, sending the world into recession, if Greece, Spain, Portugal and Italy were to withdraw from the eurozone, according to a study by a German think tank. Greece's departure would have little impact on the rest of the world, but a chain reaction leading to the others' withdrawal would have devastating consequences, economic researcher Prognos said. Spiegel Online (Germany) (17 Oct.), Reuters (17 Oct.) LinkedInFacebookTwitterEmail this Story
  • Professor warns that kill switches are not a panacea
    Bart Chilton, a member of the Commodity Futures Trading Commission, has called for kill switches that would suspend trading in the event of a technology glitch, erroneous order or other issues. However, Bernard Donefer, a professor at Baruch College and New York University's Stern School of Business, cautions that there are inherent problems with kill switches as they require someone to make a decision to shut down trading. "These kill switches, while they sound good, the implementation becomes very problematic in terms of when there is a problem, no one wants to pull the trigger," Donefer said. Reuters/Financial Regulatory Forum blog/Compliance Complete (17 Oct.) LinkedInFacebookTwitterEmail this Story
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  Market Activity 
  • Analysis: China has trouble energizing stock market
    Guo Shuqing, a year in as head of the China Securities Regulatory Commission, has been pressing for reform of the slumping stock market. However, with the global economy in turmoil, the market only keeps falling, according to The Economist. "China's stock markets are certainly in need of reform," the magazine notes. "They have been a meagre source of capital, providing only 3.4% of the finance that companies raised last year." The Economist (13 Oct.), MarketWatch (18 Oct.) LinkedInFacebookTwitterEmail this Story
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  • China's growth rate eased to 7.4% in Q3
    Growth of China's gross domestic product slowed to 7.4% in the third quarter, down from 7.6% in Q2 and 8.1% in Q1, the National Bureau of Statistics said. The data mark the seventh consecutive month of slowing growth. September retail sales and industrial production suggest GDP might accelerate this quarter. (China) (18 Oct.) LinkedInFacebookTwitterEmail this Story
  • Housing starts in U.S. rise to highest level in 4 years
    U.S. builders started construction of homes at an annual rate of 872,000 in September, a 15% increase, the fastest expansion since July 2008, the Commerce Department said. The National Association of Home Builders/Wells Fargo builder-sentiment index rose to 41 this month, the most optimistic reading since June 2006. Bloomberg (17 Oct.) LinkedInFacebookTwitterEmail this Story
  • Germany scales back growth outlook for 2013
    The German government reduced its economic-growth forecast for next year from 1.6% to 1%, reflecting consequences of the eurozone debt crisis. Economy Minister Philipp Roesler said economic problems of major trading partners could hurt German exports. (France) (17 Oct.) LinkedInFacebookTwitterEmail this Story
  • Bank of England's Tucker: "Worst may still be ahead"
    U.K. banks face regulators' demands that they trim excess reserves while acquiring more capital, and because of that, "the worst may still be ahead," said Paul Tucker, deputy governor of the Bank of England. "Basel I, II, III, IV and V are not calibrated for the kind of end-of-the-world risks that lie within the realms of the possible at the moment," Tucker said. If further assistance is needed, he said, public backlash likely will be severe. Reuters (17 Oct.) LinkedInFacebookTwitterEmail this Story
  • Study finds investor interest in alternative strategies
    Investors' lack of confidence in traditional asset-allocation models is driven by prolonged economic turmoil and stock market volatility, according to research by Natixis Global Asset Management. The study supports the idea that investors are curious about alternative investment. "Investors are interested in the idea of alternative strategies, but they still lack the knowledge on what alternatives are and how they can play a role in a portfolio," said Bob Hussey, senior vice president of institutional services. InvestmentNews (free registration) (17 Oct.) LinkedInFacebookTwitterEmail this Story
Watch the European Investment Conference live wherever you are
On 18 October watch Anatole Kaletsky tackle ‘Europe’s Economy and the Way Forward’, then hear German eurosceptic Markus Kerber take on French academic Catherine Lubochinsky to debate ‘The Future of the Euro’. On 19 October Nobel Laureate Robert Merton will discuss a new approach to macrofinancial risk.
  • Proposed SEC rules could boost cost of swaps collateral
    Swaps traders could face increased collateral and capital costs under rules proposed by the Securities and Exchange Commission. The SEC voted unanimously to invite public comment on collateral rules for swaps settled over the counter, rather than through a third-party clearinghouse. Capital requirements would increase for some classes of swaps. Bloomberg (18 Oct.) LinkedInFacebookTwitterEmail this Story
  • U.K. financial bill will include FSA's Libor recommendations
    Reform for calculation of the London Interbank Offered Rate published by the U.K. Financial Services Authority will be incorporated in a financial bill being formulated, the Treasury said. "The government's changes to legislation will ensure that those that attempt to manipulate Libor face the full force of the law," Financial Secretary Greg Clark said. "But this is just one part of the process; the banks and the British Bankers' Association will have to play their part." Reuters (17 Oct.), Bloomberg (17 Oct.) LinkedInFacebookTwitterEmail this Story
  • Solvency II likely will be delayed, EIOPA chairman says
    With an implementation deadline of Jan. 1, 2014, for Solvency II out of the question, a two-year delay is likely, said Gabriel Bernardino, chairman of the European Insurance and Occupational Pensions Authority. In addition, the European Commission asked EIOPA to review whether Solvency II calibrations should be changed to avoid discouraging insurers from investing in long-term assets. (subscription required) (17 Oct.), The Wall Street Journal/Dow Jones Newswires (17 Oct.) LinkedInFacebookTwitterEmail this Story
  • FX rule exemptions fail to comfort corporate treasurers
    Corporate treasurers are expressing confusion and concern about regulations governing currency hedging, even though not all rules will apply to them, speakers indicated at the FX Week Asia conference. Treasurers are concerned about increased costs for banks because of clearing, reporting and collateralization requirements. "If, as seems likely, they are going to be facing increased costs, we know what they're going to do -- they're going to pass on those increased costs to their customers," said Damian Glendinning, group treasurer at Lenovo. (subscription required) (17 Oct.) LinkedInFacebookTwitterEmail this Story
  • U.S. inquiry reportedly finds no evidence that Huawei spied
    A review of telecommunication-security risk ordered by the White House turned up no solid evidence that China's Huawei Technologies spied for the Chinese government, sources said. The investigation found that some Huawei equipment is vulnerable to hacking because of sloppy programming. Reuters (17 Oct.) LinkedInFacebookTwitterEmail this Story
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