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February 7, 2013
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  Top Stories 
  • Bank of Japan policymaker denies targeting a level for the yen
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    Sato/Reuters
    Bank of Japan policymaker Takehiro Sato denied that the bank has any specific level for the yen in mind, but did allow that the goal is to reduce the currency's appeal as a safe haven, possibly through a foreign bond buying program in cooperation with the government. Sato also expressed caution about dropping the 0.1% interest rate paid on excess reserves parked at the bank, though he said this remained "a future policy option." Reuters (2/6) , Xinhuanet.com (China) (2/6) LinkedInFacebookTwitterEmail this Story

  • Eurozone demand boosts German factory orders
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    Reuters
    Adding to growing signs of a turnaround in the eurozone, factory orders from the region to Germany jumped 7% in December, helping lift Germany's total seasonally adjusted orders 0.8% in December after a 1.8% decline the previous month. "It’s good news that the increase in euro-area orders was so big. It's too early to declare a recovery in the euro area, but for Germany this could be the beginning of some good hard data in the first quarter," said Frederik Ducrozet, an economist at Credit Agricole in Paris. Bloomberg Businessweek (2/6) LinkedInFacebookTwitterEmail this Story

  • U.S. CBO sees smaller deficit, growing economy
    Depending on what the U.S. Congress does on the economic front, the Congressional Budget Office projects a budget deficit this year of $845 billion, or 5.3% of GDP. However, the national debt is expected to remain at a historically high level of 76% of GDP, or $12.2 trillion, while GDP itself is forecast to grow 1.4% in 2013. U.S. News & World Report (2/5) LinkedInFacebookTwitterEmail this Story
  • Warning: Another financial meltdown may be on the way
    A repeat of the financial crisis of 2007 may be a prospect as global liquidity due to widespread quantitative easing inflates stock and property prices, the Washington-based Institute of International Finance warns. Further risk is seen in the eurozone, where developing political instability and persistent debt worries indicate that the crisis may re-emerge. The Business Times (Singapore) (2/6) LinkedInFacebookTwitterEmail this Story
  • U.S. Fed mulled possibility of turmoil before 2007 meltdown
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    Bernanke/Reuters
    The ebbing credibility of credit rating agencies was cited by U.S. Federal Reserve officials in 2007 as one possible sign of impending financial turmoil, according to newly released transcripts of a Fed Open Market Committee meeting in August of that year. Given the lost confidence, "it is much harder to see that this market will unwind itself in a rather kind and comforting environment," Kevin Warsh, then a Fed governor, said, according to the transcript. Bloomberg (2/5) LinkedInFacebookTwitterEmail this Story


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  Reader Survey 
  • Has implementation of behavioral finance precepts into your investment practice meaningfully improved your results?
    Yes, we have implemented with success  53.66%
    No, we have not implemented behavioral finance precepts  36.59%
    No, we have implemented without success  9.76%
  • Earlier this week, readers were asked whether implementing behavioral finance principles in their investment practice has meaningfully improved results. Among the three possible answers given, 36.59% of respondents indicated that they have not implemented behavioral finance at their investment firms. Although this may seem surprising, a consistent criticism of behavioral finance is its lack of a unifying theory. In other words, although behavioral finance observations of cognitive biases are descriptive, they do not necessarily suggest how to take advantage of these biases or how to avoid them. That said, a majority of respondents (63.42%) stated that they have incorporated behavioral finance tenets at their investment firms. Among this group, 53.66% reported success in implementation, whereas 9.76% stated that they have not achieved success. Perhaps recent works by Greg B. Davies and Arnaud de Servigny (Behavioral Investment Management) and Daniel Kahneman (Thinking, Fast and Slow) will not only increase implementation of behavioral finance but also improve results. Also, CFA Institute is hosting a forum, Behavioral Finance: From Theory to Practice, that may aid interested practitioners. -- Jason A. Voss, CFA, Content Director, CFA Institute
  Market Activities 
  • INTERNATIONAL MARKETS OVERVIEW
    The risk posed by the growing possibility of a return to power in Italy for Silvio Berlusconi sent a chill over markets on both sides of the Atlantic on Wednesday, while U.S. investors were also re-evaluating corporate results. The Stoxx Europe 600 declined 0.36% to 284.52, and the S&P 500 barely budged, adding 0.05% to 1,512.12. Here is a continuously updated list of global stock indices. The Wall Street Journal (2/7) , MarketWatch (2/6) , CNNMoney (2/6) LinkedInFacebookTwitterEmail this Story
  • Japanese shares surge on an up day in Asian markets
    An improved forecast from Toyota and signals of a stronger forthcoming anti-deflation push at the Bank of Japan lifted Japan's stock market to its highest close in four years Wednesday, while shares rose moderately in other Asian markets. The Nikkei surged 3.77% to close at 11,463.75, while the Hang Seng added 0.47% to 23,256.93, the Kospi edged down 0.10% to 1,936.19 and the ASX rose 0.78% to 4,921.00. Bloomberg (2/6) LinkedInFacebookTwitterEmail this Story
  Economic Trends & Outlook 
  • China's growth outlook strong, but inflation remains a worry
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    Reuters
    China's central bank says it will remain on the lookout this year for inflation originating both from foreign influences due to monetary easing and from domestic sources due to slower growth of the labor force as the economy expands. Separately, investment bank CCB International Securities says the outlook is favorable in China this year for growth as well as for an accommodating regulatory environment. Bloomberg (2/6) , China Daily (Beijing) (2/6) LinkedInFacebookTwitterEmail this Story

  • Analysis: China's shadow banking raises worrying questions
    China's problematic shadow banking sector is rendered more disturbing by the wide range of size estimates, from 5 trillion yuan to 40 trillion. Some regulators say the overall risk posed by the sector is minimal, but its potential effects are acknowledged to touch on a wide range of areas, including monetary policy and macro-control, money creation and potential rescue mechanisms. Caijing Magazine online (2/5) LinkedInFacebookTwitterEmail this Story
  Capital Markets & Financial Products 
  • South Korea looks to bond market for small-business support
    South Korean financial authorities are discussing with credit rating agencies and securities firms ways to issue high-yield bonds secured against small and midsized business loans at banks in a bid to boost liquidity for these businesses, sources say. The hope is to minimize the need for the government's ongoing direct efforts to support these smaller enterprises, which some believe may pose the danger of moral hazard. MK.co.kr (South Korea) (2/6) LinkedInFacebookTwitterEmail this Story
  Industry & Regulatory Update 
  • HSBC chief owns up to bank's past allure for wrongdoers
    Its globe-spanning business and a complex structure made HSBC particularly inviting for criminal activity, forcing the bank into extensive restructuring, CEO Stuart Gulliver told U.K. lawmakers. "Our geographic footprint became very attractive to trans-national criminal organizations, whether they are terrorist in origin or criminal in origin," Gulliver said, noting the glaring inadequacy of the bank's anti-money-laundering safeguards in Mexico "crushed our reputation." Reuters (2/6) LinkedInFacebookTwitterEmail this Story
  • Taiwan Financial optimistic over yuan business, regional expansion
    Its yuan business should help boost Taiwan Financial Holding to higher profits this year, as should its drive to expand across the Asia-Pacific region, the state-owned financial services provider says. In particular, the company's Bank of Taiwan arm may apply to offer yuan products and services to Taiwanese customers in China as it builds on last year's establishment of its first China branch in Shanghai. The Taipei Times (Taiwan) (2/7) LinkedInFacebookTwitterEmail this Story
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