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22 February 2013
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  Top Stories 
  • GM invests $7.3B to expand production in South Korea
    During the next five years, General Motors' South Korean unit plans to spend $7.3 billion to expand manufacturing and design facilities. GM is building models to compete with Toyota Motor, which replaced GM as the world's top automaker last year. Bloomberg (22 Feb.) LinkedInFacebookTwitterEmail this Story
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  Reader Survey 
  • Since the onset of the financial crisis of 2008, central banks around the world have battled deleveraging with monetary policy. Do you feel that this new money will manifest itself in significant inflation? If so, when?
    Yes, I see significant inflation arising within the next three years  39.13%
    Yes, inflation is already here; it is just not captured well by conventional measures  21.81%
    Yes, but it will take longer than three years to reveal any significant changes  19.61%
    There is no risk of significant inflation at this time  13.78%
    Yes, I see significant inflation arising within the next 12 months  5.67%
  • Poll analysis: On 10 September 2008, the U.S. monetary base stood at $875.7 billion. In contrast, on 6 February 2013, it stood at $2.8201 trillion, a full 222% increase in just four and a half years. Of course, this increase has not manifested itself broadly in product prices. One of the great myths of finance is that monetary expansion affects all goods, services and assets equally. Commodities and many financial assets are up strongly, while many consumer products and house prices are down sharply. Moreover, constraints on lending and the financial incentives of low interest rates have thus far kept the money supply in check. For example, M2 is up only 34% since 2008. This sharp difference between the growth in the monetary base and M2 is at least partially explained by a sharp decline in the velocity of money, meaning that economic activity has slowed sharply and has -- thus far -- been offset in part by the Fed's aggressive monetary actions. But the poll results clearly reveal that investment professionals are apprehensive about how much longer this situation can continue. Only 14% of 1,270 respondents seem unconcerned about significant inflation. The other 86% are concerned, and for good reason. -- Ron Rimkus, Content Director, CFA Institute LinkedInFacebookTwitterEmail this Story
  Market Activity 
  • Asian-Pacific markets mixed, with Australia, Japan advancing
    Asian-Pacific markets were mixed Friday with Australian and Japanese exchanges recovering from Thursday's declines. Australia's S&P/ASX 200 closed up 0.8%. Japan's Nikkei 225 rose 0.7%. South Korea's Kospi edged up 0.2%. Taiwan's Taiex inched up 0.1%. China's Shanghai Composite and Hong Kong's Hang Seng Index each lost 0.5%. India's Sensex was essentially flat. MarketWatch (22 Feb.), The Economic Times (India) (26 Feb.) LinkedInFacebookTwitterEmail this Story
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  Economics 
  • Obama and Republicans break silence and restart budget talks
    The White House and Republican leaders in Congress have restarted talks on how to avert across-the-board U.S. spending cuts set to take effect March 1. President Barack Obama spoke with Senate Minority Leader Mitch McConnell of Kentucky and House Speaker John Boehner of Ohio. White House spokesman Jay Carney said the conversations were "good" but didn't give any details. Reuters (21 Feb.) LinkedInFacebookTwitterEmail this Story
  • Survey: Shoppers will spend less because of payroll-tax hike
    Because of the payroll-tax increase Jan. 1, 45.7% of American consumers plan to reduce retail spending, according to a survey by the National Retail Federation. Wal-Mart Stores said in its earnings report that many shoppers are delaying purchases until they receive their tax refunds. However, according to the survey, only 30% of respondents plan to spend their tax refunds. Most will save the money or use it pay down debt. 24/7 Wall St. (21 Feb.), The Hill/On the Money blog (21 Feb.) LinkedInFacebookTwitterEmail this Story
  • First-time jobless claims climb by 20,000
    U.S. initial unemployment claims increased by 20,000 last week, reaching a seasonally adjusted 362,000. The total is consistent with a slow recovery in the job market, the Labor Department says. The four-week rolling average, viewed as a better indicator of labor-market conditions, has fallen 7.5% since mid-November. Employers added an average of 200,000 workers in each of November, December and January. USA Today/The Associated Press (21 Feb.), Medill Reports (Northwestern University) (21 Feb.) LinkedInFacebookTwitterEmail this Story
  • Ultra-wealthy want more info from advisers, survey finds
    A survey by SEI Private Wealth Management of investors with an average of $11.8 million in financial assets found that 57% think they aren't getting enough information from financial advisers to assess risk. "The results show that many investors feel isolated when making financial decisions," Managing Director Michael Farrell said. AdvisorOne (21 Feb.) LinkedInFacebookTwitterEmail this Story
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  Geopolitical/Regulatory 
  • Gensler questions sustainability of benchmark rates
    Gary Gensler, chairman of the Commodity Futures Trading Commission, says he doubts the long-term viability of benchmarks such as the London Interbank Offered Rate. Gensler, calling Libor and other benchmarks unstable and their underlying markets permanently disrupted, says "anchoring to real transactions is essential to have confidence in these benchmarks." Bloomberg Businessweek (21 Feb.) LinkedInFacebookTwitterEmail this Story
  • EBA plans to develop scorecard of asset liquidity
    The European Banking Authority says it will rank financial assets according to liquidity as regulators begin to implement Basel III rules. The rankings are intended to help banks meet the liquidity-coverage ratio. Bloomberg (21 Feb.) LinkedInFacebookTwitterEmail this Story
  • CFTC and SEC expect no major disruption from sequester
    The Securities and Exchange Commission and the Commodity Futures Trading Commission expect mostly business as usual if the budget sequester goes into effect March 1. "We would definitely have to cut back expenditures in technology. ... We're doing everything to husband our resources to avoid a furlough," CFTC Chairman Gary Gensler said. Similarly, an SEC spokesman says there likely would be no reduction in workforce. Reuters (22 Feb.) LinkedInFacebookTwitterEmail this Story
  • FSOC is asked to step back from money-fund rules
    As the Financial Stability Oversight Council pressures the Securities and Exchange Commission to adopt rules for money market funds, a group of former SEC chairmen, commissioners and senior staff is asking the FSOC to take a step back. In a letter, the former officials ask the FSOC to "respect the jurisdiction, independence, subject-matter expertise and regulatory processes" of the SEC. Reuters (21 Feb.) LinkedInFacebookTwitterEmail this Story
  Financial Products 
  • Trading begins for 2 low-volatility ETFs by SSgA
    State Street Global Advisors has launched two exchange-traded funds investing in low-volatility stocks. The SPDR Russell 1000 Low Volatility ETF tracks the Russell 1000 Low Volatility Index, made up of 92 large-cap stocks. The SPDR Russell 2000 Low Volatility ETF is linked to the Russell 2000 Low Volatility Index, which comprises 170 small-cap stocks. ETFguide (21 Feb.), ETF Trends (21 Feb.), IndexUniverse.com (21 Feb.) LinkedInFacebookTwitterEmail this Story
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