U.S. Congress works to avert March 27 government shutdown | Kuroda notes support for BoJ monetary easing to boost inflation | Greece briefs creditors on status of budget, economy, reform
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04 March 2013
CFA Institute: Financial NewsBrief
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U.S. Congress works to avert March 27 government shutdown
Congressional leaders said they were optimistic a deal could be reached to avert a U.S. government shutdown when its funding authorization expires March 27. House Speaker John Boehner said he was "hopeful that the House and Senate will be able to work through this." There were no signs lawmakers will make any efforts to modify or undo across-the-board spending cuts that took effect Friday. The Washington Post (tiered subscription model) (03 Mar.), Los Angeles Times (tiered subscription model)/Politics Now blog (03 Mar.), Politico (04 Mar.)
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Kuroda notes support for BoJ monetary easing to boost inflation
Haruhiko Kuroda, who has been nominated to run the Bank of Japan, says the central bank isn't buying enough assets to end deflation and raise the inflation rate to 2% within two years. "It would be natural for the BoJ to buy longer-dated government bonds in huge amounts," he said during a parliamentary confirmation hearing. Reuters (04 Mar.), NHK World (Japan) (04 Mar.), Bloomberg (04 Mar.)
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Greece briefs creditors on status of budget, economy, reform
No serious disagreements arose during a meeting between Greek Finance Minister Yannis Stournaras and representatives of the nation's creditors, sources say. The discussions dealt with issues including structural reform such as opening up closed-shop professions, how to make the best use of the Finance Ministry's 60,000 employees, the condition of the economy, budget estimates, privatization and tax administration, the sources said. Kathimerini (Greece) (03 Mar.), France 24/Agence France-Presse (03 Mar.)
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Irish premier makes job creation a top priority
Irish Prime Minister Enda Kenny said his government will work harder to support job creation and help the unemployed find work. "The economic recovery cannot be allowed to bypass those families most hurt by the collapse," he wrote in the Irish Times on the two-year anniversary of his governing coalition. The EU, European Central Bank and International Monetary Fund have criticized the slow pace of Ireland's efforts to reduce unemployment. The Irish Times (Dublin) (04 Mar.), Finfacts Ireland (04 Mar.)
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Market ActivityAdvertisement
Most Asian-Pacific markets fall, but Japan posts modest gain
Most Asian-Pacific markets fell Monday. China's Shanghai Composite fell 3.7% -- the sharpest decline since August 2011 -- and the Shenzhen Composite dropped 3.5% after the government publicized measures to cool property prices. Hong Kong's Hang Seng Index gave up 1.5%. South Korea's Kospi fell 0.7%. Australia's S&P/ASX 200 lost 0.6%. India's Sensex was down 0.3%. Bucking the trend, Japan's Nikkei 225 advanced 0.4%. MarketWatch (04 Mar.), The Economic Times (India) (17 Sep.)
Funds cut commodity exposure to lowest level in 4 years
Fund managers and other major speculators slashed net-long positions across 18 U.S. futures and options by 16% in the week that ended Feb. 26, according to Commodity Futures Trading Commission data. That brought exposure to commodities to its lowest level since March 2009. Bloomberg (04 Mar.)
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Volume and profit of high-frequency trading trend downward
Rosenblatt Securities, an agency broker monitoring off-exchange trading, reports that average daily volume on U.S. equity markets declined to 6.45 billion shares in 2012 from 9.75 billion in 2009, some of which is high-frequency trading. Traders Magazine Online (01 Mar.)
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Nasdaq undertakes loss-making trades to boost volume
Nasdaq OMX Group is executing some trades at a loss, issuing rebates higher than the execution price, to boost transaction volume. Financial Times (tiered subscription model) (03 Mar.)
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EconomicsAdvertisement
Rising corporate profit isn't creating jobs in U.S.
The Dow Jones industrial average rose to within 75 points of a record high last week, marking what has become a golden age of corporate profit while millions of Americans are still unable to find work. During the third quarter of 2012, corporate profit accounted for 14.2% of national income, the most since 1950. The portion of that income paid to workers was 61.7%, close to the lowest amount since 1966. The New York Times (tiered subscription model) (03 Mar.)
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Demonstrators demand end to Portuguese austerity
Austerity protests have swept Portugal, including a gathering of more than 200,000 people outside the Finance Ministry. The demonstrations coincide with a visit by officials of the European Commission, the European Central Bank and the International Monetary Fund to review the progress of Portugal's rescue program. EuroNews.com (France) (03 Mar.), Deutsche Welle (Germany)/Reuters/The Associated Press (03 Mar.)
Wal-Mart Foundation chief is Obama's choice for budget office
President Barack Obama will nominate Wal-Mart Foundation President Sylvia Mathews Burwell to head the Office of Management and Budget, a White House official says. She served as an aide to former Treasury Secretary Robert Rubin and on the staff of the National Economic Council. Burwell has worked at nonprofit institutions since leaving government. The New York Times (tiered subscription model) (03 Mar.), The Washington Post (tiered subscription model)/Wonkblog (03 Mar.)
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Analysis: U.S. should permit natural gas exports
Exportation of U.S. natural gas would benefit everybody involved, according to The Economist. "America could be making a fortune from gas exports," the magazine notes. "To the extent that such exports displaced dirty coal, they would also help curb global warming." The Economist (tiered subscription model) (02 Mar.)
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Analysis: Economic woes put pressure on central banks
Central banks in Europe and the U.S. likely look at China's economic growth with envy, but the People's Bank of China has its own challenges. Louis Kuijs, an economist at Royal Bank of Scotland, says the West is hoping China will drive the global economy, while China is relying on economic improvement in the West to boost exports and corporate investment. Reuters (04 Mar.)
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Geopolitical/Regulatory
MiFID II is on agenda of Council of the EU
The Council of the EU is poised to discuss the revised Markets in Financial Instruments Directive, specifically market structure, organized trading facilities, bond-market transparency and dark pools. The Trade News (U.K.) (tiered subscription model) (01 Mar.)
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Transaction tax could stall Europe's equity rally, TABB says
Implementation of a tax on financial transactions in 11 European nations could hinder a rally in equity markets, according to an analysis by TABB Group. The firm used France's recently adopted levy as an example of how European markets might respond. The Trade News (U.K.) (tiered subscription model) (01 Mar.)
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Banks express concerns about consequences of regulations
A Citigroup securities filing says a Dodd-Frank Act provision forcing overseas branches to comply with U.S. derivatives rules might cost the bank customers. Clients "have expressed an unwillingness to continue to deal with overseas branches of U.S. banks if the rules would subject them to these requirements," according to Citigroup. Meanwhile, Goldman Sachs says ring-fencing subsidiaries would force the bank to hold more capital. Bloomberg (01 Mar.)
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Financial Products
ALPS rolls out ETF linked to options index
ALPS has introduced an exchange-traded fund that tracks the performance of an index of options on high-volatility stocks. The U.S. Equity High Volatility Put Write Index Fund is linked to the NYSE Arca U.S. Equity High Volatility Put Write Index. The index is designed to replicate the performance of put options on a group of highly volatile large-capitalization stocks. Zacks (01 Mar.), Bloomberg (01 Mar.)
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Venture Exchanges and Investor Risk and Returns
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Ethics
Review finds more faulty foreclosures of military homes
A regulatory review has turned up more than 700 cases of the biggest U.S. banks foreclosing on homes of military personnel in violation of federal law. The examination also uncovered two dozen instances of people who were current on their mortgage payments having their homes seized by banks. The analysis offers the first detailed picture of illegal foreclosures during the collapse of the housing market. The New York Times (tiered subscription model)/DealBook blog (03 Mar.)
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