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11 January 2013
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  Top Stories 
  • Fed gives U.S. a record $88.9B
    The Federal Reserve paid the U.S. government a record $88.9 billion in 2012, a 17.9% increase from $75.4 billion in 2011. The central bank earned the money from the mortgage-backed securities and Treasury bonds it has bought. The previous record was $79.3 billion in 2010. The Washington Post/The Associated Press (10 Jan.) LinkedInFacebookTwitterEmail this Story
  • Analysis: Lenovo becomes world's biggest computer company
    The path that took China's Lenovo from its humble beginnings to recognition as the world's biggest computer company was a rocky one but it may achieve even greater success in the coming years, according to The Economist. "Lenovo does not simply churn out cheap goods. It is spending heavily on branding, distribution, manufacturing and product development," the magazine notes. "And alongside its cheap gizmos are many mid-range and some premium gadgets, such as the Yoga, a laptop that cleverly converts into a tablet." The Economist (subscription required) (12 Jan.) LinkedInFacebookTwitterEmail this Story
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  Reader Survey 
  • Which has been the greatest investing lesson for you during the past five years?
    Central banks and governments will continue to bail out troubled creditors  59.16%
    Equity-market structures are having negative effects on market trust  23.72%
    Institutional creditors will be more prudent in lending  9.51%
    Systemically important financial institutions' boards are working to manage risks arising from the companies' complexity  3.80%
    Financial regulations will prevent systemic failures in the future  3.80%
  • Poll analysis: In a February 2009 speech at the Marcus Evans conference on "stress testing," Andrew Haldane -- then executive director for financial stability at the Bank of England -- noted his first run-in with market realism. He recounted a discussion he had been a part of, in which bankers were asked about the need for more severe stress-test scenarios than were currently in use by banks. Haldane says the bankers responded that "in that event, the authorities would have to step in to save a bank and others suffering a similar plight." Based on the results of this week's CFA Institute Financial NewsBrief Reader Survey, investors' expectations have not been changed by what legislators, parliamentarians, central bankers or regulators have done in the nearly five years since the failure of Bear, Stearns & Co. Asked about the most important investment lesson they've learned over the past five years, 59.5% of 999 survey respondents said it is that central banks and governments will continue to bail out troubled creditors. Even worse, slightly more than 9% of respondents believe that institutional creditors will be more prudent in their lending in the future. In the parlance of economics books, this situation sounds like a recipe for moral hazard. Just 3.6% of respondents agreed that financial regulations adopted since 2008 will prevent systemic failures in the future -- a similar percentage to that of a broader CFA Institute poll taken in July 2010, immediately after the passage of the Dodd-Frank Act. In the July 2010 survey, only one response apart from the statement on bailouts was seen as credible -- namely, that equity market structures are negatively affecting market trust (24%). -- James C. Allen, CFA, Head, Capital Markets Policy, CFA Institute LinkedInFacebookTwitterEmail this Story
  Market Activity 
  • Japan rises while other Asian-Pacific markets fall
    Most Asian-Pacific markets fell Friday after China reported higher consumer inflation. Japan's Nikkei 225 bucked the trend in response to the falling yen, rising 1.4%. China's Shanghai Composite fell 1.8%. Hong Kong's Hang Seng Index slid 0.4%. South Korea's Kospi gave up 0.5%. Australia's S&P/ASX 200 edged down 0.3%. India's Sensex was flat at midafternoon. MarketWatch (11 Jan.), The Economic Times (India) (17 Jan.) LinkedInFacebookTwitterEmail this Story
  • Weekly stock mutual inflows hit $7.5B, highest since 2001
    During the week that ended Jan. 9, U.S. investors put $7.53 billion into stock mutual funds, the biggest amount since May 2001, according to data from Thomson Reuters' Lipper service. Over the same period, inflow for exchange-traded funds that buy stocks totaled $10.78 billion. Reuters (10 Jan.) LinkedInFacebookTwitterEmail this Story
  • Fidelity may start daily NAV reporting for money funds
    The biggest provider of money market funds in the U.S., Fidelity Investments, said it may join other industry leaders in reporting the net asset value of its money funds daily. Stephen Austin, a spokesman for the company, said Fidelity is seriously considering making the change already embraced by BlackRock, Goldman Sachs and JPMorgan Chase. InvestmentNews (free registration) (10 Jan.) LinkedInFacebookTwitterEmail this Story
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  Economics 
  • Financial advisers closely monitored by wealthy clients, survey finds
    The high-net-worth clients of financial advisers today rarely give advisers full control of their assets, according to a survey by the Institute for Private Investors. Among wealthy families with less than $50 million in assets, only 32% favor giving advisers full discretion over portfolio management. Only 1 in 5 families with more than $200 million worth of assets give complete discretion to advisers. InvestmentNews (free registration) (10 Jan.) LinkedInFacebookTwitterEmail this Story
  • BoE leaves interest rate unchanged
    The Bank of England's Monetary Policy Committee left its rate unchanged Thursday at its first meeting of the year. "Most members of the committee are probably pretty happy to keep things as they are and see how the [government's Funding for Lending Scheme] evolves and how the economy picks up," said Vicky Redwood of Capital Economics. The Telegraph (London) (tiered subscription model) (10 Jan.), Bloomberg (10 Jan.) LinkedInFacebookTwitterEmail this Story
  • Food costs help push China's inflation rate up 2.5%
    Consumer prices in China were 2.5% higher in December than in the same month a year ago, largely because of a 4.2% increase in food costs, according to its National Bureau of Statistics. The figure was above November's 2% inflation rate but well below the inflation rate of 4% or higher that China experienced a year ago. CNNMoney (10 Jan.) LinkedInFacebookTwitterEmail this Story
  Geopolitical/Regulatory 
  • FBI doggedly pursues Libor cases -- from Washington, D.C.
    The FBI's Washington, D.C., field office is driving the U.S. investigation into the London Interbank Offered Rate scandal and other benchmark rigging. "We've got an enormous amount of resources devoted to this," said Timothy Gallagher, head of the Washington criminal division, who is overseeing the probe. "People think that financial fraud is pursued in New York, but we're pursuing it vigorously here," Gallagher said. "There's more than enough to go around." Bloomberg (10 Jan.) LinkedInFacebookTwitterEmail this Story
  • SEC considers whether BATS glitches are affecting other exchanges
    Recent trading glitches at BATS Global Markets have led the Securities and Exchange Commission to speculate that the same problems may be happening at other exchanges. Joe Ratterman, CEO of BATS, said Thursday the problems are "indicative of complexity in the markets." Regulators, he suggested, should study how that complexity is leading to mistakes. The Wall Street Journal (10 Jan.) LinkedInFacebookTwitterEmail this Story
  Financial Products 
  • Lyxor rolls out Europe's first gold stock index ETF
    Lyxor brought to the NYSE Euronext Paris exchange the first index-linked exchange-traded fund investing in gold stocks available to European investors. The Lyxor ETF MSCI ACWI Gold ETF tracks the MSCI ACWI Gold with EM DR 18% Group Entity Capped Index, which includes gold stocks from a mix of developed and emerging markets. IndexUniverse.eu (10 Jan.) LinkedInFacebookTwitterEmail this Story
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