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20 February 2013
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  • Obama warns of harm to economy if sequester takes effect
    President Barack Obama said thousands of jobs and the U.S. economy will be put in danger if the budget sequester set takes effect March 1, imposing $85 billion of spending cuts. He appealed to Republican lawmakers to back a debt-reduction plan that relies on a combination of revenues from eliminating tax breaks for the wealthy and a spending reduction. Republicans said Obama was merely trying to shift the blame for the sequester. USA Today (19 Feb.), NBC News/First Read blog (19 Feb.), The Washington Post (19 Feb.) LinkedInFacebookTwitterEmail this Story
  • FBI looks into possible insider trading in Heinz options
    The FBI said it was investigating suspicious trading in H.J. Heinz options before the announcement of the company's acquisition by Warren Buffett's Berkshire Hathaway and Brazil's 3G Capital. Options traders noticed unusual activity the day before the deal was made public. Reuters (19 Feb.) LinkedInFacebookTwitterEmail this Story
  • Italy likely will seek rescue if Berlusconi wins vote, bank says
    Mediobanca, Italy's largest investment bank, said the nation likely will seek an EU rescue if former Prime Minister Silvio Berlusconi scores a comeback victory in the upcoming general election. Borrowing costs will rise if Berlusconi returns to the government and offer a "perfect excuse" to seek aid, the bank said in a report. EUObserver (Brussels) (19 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?
There is no risk of significant inflation at this time
Yes, inflation is already here; it is just not captured well by conventional measures
Yes, I see significant inflation arising within the next 12 months
Yes, I see significant inflation arising within the next three years
Yes, but it will take longer than three years to reveal any significant changes

  Market Activity 
 
  • South Korea leads gains as Asian-Pacific markets rise
    Markets rose across the Asian-Pacific region with South Korea's Kospi, closing up 2%, posting the biggest advance. Japan's Nikkei 225 rose 0.8%. Australia's S&P/ASX 200 moved up 0.3%. Hong Kong's Hang Seng Index added 0.7%. China's Shanghai Composite gained 0.6%. Taiwan's Taiex added 0.9%. India's Sensex edged up fractionally. MarketWatch (20 Feb.), The Economic Times (India) (26 Feb.) LinkedInFacebookTwitterEmail this Story
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  Economics 
  • Business lending surges as banks seek growth
    U.S. businesses are inundated with so many inexpensive loans that banks' margins are coming under pressure. Commercial and industrial loans increased 16% in 2012, according to SNL Financial. A Federal Reserve survey found narrowing loan spreads and relaxed lending standards. The Wall Street Journal (19 Feb.) LinkedInFacebookTwitterEmail this Story
  • Japanese trade deficit reaches record $17.4B
    Japan's trade deficit, amid higher energy imports and a falling yen, reached an all-time high of $17.4 billion last month, the Finance Ministry says. Exports increased 6.4% compared with January 2012, suggesting global demand is recovering. Bloomberg (19 Feb.) LinkedInFacebookTwitterEmail this Story
  • Recovery is emerging in eurozone, ECB official says
    European Central Bank Executive Board member Joerg Asmussen expects the eurozone to see a better first quarter as economic recovery begins to take hold. "As we see incoming indicators, I would expect the first quarter to be stronger ... We expect a very gradual recovery over the course of the year," Asmussen said. Reuters (19 Feb.) LinkedInFacebookTwitterEmail this Story
  • Analysis: Business should back Obama's call for EU trade pact
    U.S. businesses should quickly express support for a free-trade agreement with the EU, as endorsed by President Barack Obama during his State of the Union address, according to The Economist. "The only reason for business not to throw everything it has behind [the Transatlantic Trade and Investment Partnership] would be if there were a bigger global trade pact to be had," the magazine notes. "Sadly, there is not." The Economist (tiered subscription model) (16 Feb.) LinkedInFacebookTwitterEmail this Story
  • Index shows slip in homebuilders' confidence
    U.S. homebuilders have become less optimistic this month, according to the National Association of Home Builders/Wells Fargo Housing Market Index. "This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit," NAHB Chairman Rick Judson said. "But it's also a reflection of the fact that builders are now confronting rising costs for building materials and, in some markets, limited availability of labor and lots as demand for new homes strengthens." Los Angeles Times (tiered subscription model)/Money & Co. blog (19 Feb.), eCreditDaily.com (19 Feb.) LinkedInFacebookTwitterEmail this Story
Reining in Risk
CFA Institute report: Investors need better disclosure of derivatives and hedging activities

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  Geopolitical/Regulatory 
  • ESMA encourages code of conduct for proxy advisers
    The European Securities and Markets Authority doesn't think proxy advisers need regulation but says such advisers, who help institutional investors decide how to vote with their shares, could use a voluntary code of conduct. Industry leaders support the idea, ESMA says. Reuters (19 Feb.) LinkedInFacebookTwitterEmail this Story
  • Industry groups voice concern about MiFID provision
    Several industry groups have expressed alarm at the creation of a category of organized trading facilities that aims to formalize the structure of over-the-counter trades. The groups see a closing window to influence drafting of the Market in Financial Instruments Directive and wrote to express concern that "the introduction of an OTF for equities will create a two-tier market which risks leaving small and midsize companies behind and compromise a neutral price discovery process." Financial News Online (U.K.) (subscription required) (20 Feb.) LinkedInFacebookTwitterEmail this Story
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  Financial Products 
  • Franklin Templeton readies its first ETF
    Mutual fund firm Franklin Templeton has filed a registration statement with the Securities and Exchange Commission for its first exchange-traded fund, a short-maturity bond fund. The Franklin Short Duration Government ETF would invest primarily in U.S. Treasurys and mortgage-backed bonds maturing in three years or less. IndexUniverse.com (19 Feb.) LinkedInFacebookTwitterEmail this Story
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