Obama calls for swift action to overhaul immigration law | Kerry is confirmed as secretary of state in 94-3 vote | Chesapeake Energy CEO McClendon will step down
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30 January 2013
CFA Institute: Financial NewsBrief
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Obama calls for swift action to overhaul immigration law
President Barack Obama urged Congress to move swiftly to reform immigration law, building on momentum created by a bipartisan compromise in the Senate. The 11 million illegal immigrants in the U.S. should be given a clear path to achieving citizenship, he said. The speech was part of a campaign to pressure Republicans to write the bipartisan proposal into law, a senior administration official said. The New York Times (tiered subscription model) (29 Jan.), Las Vegas Sun (29 Jan.), TheFiscalTimes.com (30 Jan.)
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Kerry is confirmed as secretary of state in 94-3 vote
The Senate voted 94-3 to confirm President Barack Obama's nomination of Sen. John Kerry, D-Mass., to be the next U.S. secretary of state, replacing Hillary Clinton. Fellow senators said Kerry, a decorated Vietnam War veteran and the son of a diplomat, has been preparing for the job his entire life. Kerry will have a major role in deciding whether the government approves the proposed Keystone XL oil pipeline from Canada. Reuters (29 Jan.), The Christian Science Monitor (29 Jan.), Los Angeles Times (tiered subscription model)/The Associated Press (29 Jan.)
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Chesapeake Energy CEO McClendon will step down
Aubrey McClendon, CEO and co-founder of Chesapeake Energy, the second-biggest producer of natural gas in the U.S., will step down April 1. The company's share price rose 11% after his planned departure was made public. The company said it is investigating McClendon's financial matters, including his involvement in Chesapeake's Founder Well Participation Program. Forbes (29 Jan.), CNBC (29 Jan.)
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Market Activity
Asian-Pacific markets rise, with Japan posting biggest gain
Asian-Pacific markets rose Wednesday with Japan leading the trend. Japan's Nikkei 225 jumped 2.3%. Hong Kong's Hang Seng Index gained 0.7%. China's Shanghai Composite edged up 0.1%. South Korea's Kospi and Taiwan's Taiex each added 0.4%. Australia's S&P/ASX 200 finished 0.2% higher. India's Sensex was up 0.1% at midafternoon. MarketWatch (30 Jan.), The Economic Times (India) (26 Feb.)
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Amazon share price jumps after Q4 profit tops forecasts
Amazon reported a fourth-quarter profit that beat Wall Street's forecasts, sending its share price to an all-time high. The Internet retailer said e-books, video sales and cloud-computing services were key to boosting profitability. Reuters (29 Jan.), Bloomberg (30 Jan.)
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Economics
No plan in sight to avert deep spending cuts in U.S.
Severe, across-the-board U.S. government spending cuts are set to automatically take effect March 1 and lawmakers of both parties said there is little hope of averting them. Military spending will take a big hit, and some of the Pentagon's most vocal advocates are resigned to seeing the cuts implemented for now. The Washington Post (tiered subscription model) (29 Jan.)
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U.S. house-price index increases the most in 6 years
The Standard & Poor's/Case-Shiller property-price index, which tracks sales in 20 U.S. cities, rose 5.5% in November compared with November 2011. It was the largest year-over-year gain since August 2006. Bloomberg (29 Jan.), Live Trading News (Singapore) (30 Jan.)
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U.S. consumer confidence falls as payroll-tax hike hits income
The Conference Board said its consumer-confidence index fell to 58.6 in January, the lowest reading since November 2011. Americans became less optimistic about the future after a payroll-tax increase took effect at the beginning of the month and reduced take-home pay, Conference Board economist Lynn Franco said. USA Today/The Associated Press (29 Jan.)
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Strategist: Economy is in better shape than reported
While it may not be apparent from news reports, the fundamentals underlying the U.S. economy look remarkably good, Greg Valliere, Potomac Group's chief political strategist, said at the Financial Services Institute's OneVoice 2013 conference in San Diego. Unemployment is set to fall to 7% by year's end, gross domestic product likely will rise 2.5% in the second quarter, there isn't a hint of inflation and interest rates are low, he said. WealthManagement.com (U.S.) (29 Jan.)
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Japanese banks expand corporate lending in U.S. and Europe
Banks in Japan are increasingly stepping in to satisfy loan demand by U.S. and European businesses. The Bank for International Settlement says Japan is steadily increasing its share of global lending, accounting for about 10%, compared with 6% shortly before Lehman Brothers Holdings collapsed in 2008. The Wall Street Journal (tiered subscription model) (29 Jan.)
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Analysis: Cameron's EU referendum gambles with U.K. economy
U.K. Prime Minister David Cameron is gambling unnecessarily with the economy by proposing a referendum on whether to leave the EU, according to The Economist. "Business is, by and large, horrified by the prospect that Britain might leave. ... The threat of an exit as soon as 2017 is likely to discourage multinational companies from investing in Britain," the magazine notes. The Economist (tiered subscription model) (26 Jan.)
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Advisers gain business amid tougher retirement-plan rules
Recent moves by the U.S. Labor Department to strengthen rules governing employer-sponsored retirement plans are bringing business to financial advisers, according to a white paper by Broadridge Financial Solutions. Employers are seeking out advisers who can help them understand and comply with the requirements. Many small-business owners are demanding that advisers assume fiduciary duty when they work on retirement plans, the paper says. InvestmentNews (free registration) (28 Jan.)
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Geopolitical/Regulatory
European transaction tax could generate €35B
The European Commission estimates that a proposed financial-transaction tax pursued by 11 eurozone nations, including Germany and France, would raise as much as €35 billion. Financial Times (tiered subscription model) (29 Jan.)
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U.S. Capitol Police inspector general is named to SEC post
Carl Hoecker, formerly inspector general of the U.S. Capitol Police, has been named to that position at the Securities and Exchange Commission. Hoecker takes over for Jon Rymer, who became interim inspector general after H. David Kotz left last year. Rymer is the inspector general of the Federal Deposit Insurance Corp. The Hill/On the Money blog (29 Jan.), Reuters (29 Jan.)
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Poll: Derivatives rules lack implementation details
Regulators are not providing enough information to successfully implement derivatives rules, according to a Risk.net poll. Only 12% of respondents think information contained in regulatory frameworks is sufficient. Risk.net (subscription required) (29 Jan.)
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FERC suggests $470M fine against Barclays
The Federal Energy Regulatory Commission recommended fining Barclays $470 million and sending the case on possible manipulation of the energy market to U.S. court. The fine would be the biggest in FERC's history. "If the FERC proceeds, we intend to vigorously defend this matter in federal court," Barclays spokesman Mark Lane said. The Wall Street Journal (tiered subscription model) (29 Jan.)
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Financial Products
IShares readies 8 target-maturity bond ETFs
IShares filed with the Securities and Exchange Commission for authorization to offer eight passively managed exchange-traded bond funds maturing in a specified year. Four of the ETFs would buy multisector investment-grade bonds maturing in 2016, 2018, 2020 or 2023. The remaining funds would acquire financial-sector bonds due in 2016, 2018, 2020 or 2023. Morningstar (28 Jan.)
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Ethics
BP's $4B plea deal in rig explosion gains court approval
U.S. District Judge Sarah Vance accepted a plea agreement between BP and the government regarding the 2010 explosion of the Deepwater Horizon drilling rig. The agreement requires BP to pay $4 billion to settle criminal charges. The oil company pleaded guilty to 11 counts of felony manslaughter, one count of felony obstruction of Congress and a long list of violations of environmental law. The Times-Picayune (New Orleans) (30 Jan.), BBC (29 Jan.)
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