Biden signals possible run for White House in 2016 | Dutchman is expected to head Eurogroup | Boeing stops delivery of 787 Dreamliner
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21 January 2013
CFA Institute: Financial NewsBrief
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Obama begins term with private swearing-in ceremony
Barack Obama started his second term as U.S. president by taking the oath of office in a private ceremony in the White House. This inauguration was scaled back compared with his first, a reflection of tempered expectations amid persistently high unemployment, ongoing political battles and other issues. Reuters (21 Jan.), The Washington Post (tiered subscription model) (20 Jan.), The New York Times (tiered subscription model) (20 Jan.)
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Biden signals possible run for White House in 2016
U.S. Vice President Joe Biden might have quietly launched his 2016 campaign for the presidency as he began his second term by building relationships with states that play a big part in selecting the Democratic Party's nominee. He invited New Hampshire's governor to his swearing-in ceremony and attended an inaugural ball sponsored by Iowa Democrats. CNN/Political Ticker blog (20 Jan.), USA Today/The Oval blog (20 Jan.)
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Dutchman is expected to head Eurogroup
Dutch Finance Minister Jeroen Dijsselbloem, who has German support, might succeed Jean-Claude Juncker as chairman of the Eurogroup, the organization of eurozone finance ministers. French Finance Minister Pierre Moscovici says he expects Dijsselbloem, who has a history of backing tough economic reform, to be selected. EuroNews.com (France) (18 Jan.), Reuters (20 Jan.)
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Boeing stops delivery of 787 Dreamliner
Boeing said it has suspended delivery of the 787 Dreamliner to airlines while it corrects problems with lithium-ion batteries responsible for a string of mishaps. "Production of 787s continues," spokesman Marc Birtel said. "We will not deliver 787s until the [U.S. Federal Aviation Administration] approves a means of compliance with their recent airworthiness directive concerning batteries and the approved approach has been implemented." Bloomberg (18 Jan.), Reuters (21 Jan.)
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Merkel suffers setback in German state election
Germany's conservative governing coalition, led by Chancellor Angela Merkel, was defeated in a key election in Lower Saxony state. The Green Party and the center-left Social Democratic Party gained a one-seat advantage in the regional parliament and ousted the conservative government aligned with Merkel. Her Christian Democratic Union party has been defeated in the previous 13 state elections. Spiegel Online (Germany) (21 Jan.), The Guardian (London) (20 Jan.)
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Asian-Pacific markets are mixed, while Japan leads decline
Japan's Nikkei 225 took the biggest fall -- dropping 1.5% -- as Asian-Pacific markets posted mixed results Monday. Taiwan's Taiex, Hong Kong's Hang Seng Index and South Korea's Kospi slid 0.1%. Australia's S&P/ASX 200 rose 0.1%. China's Shanghai Composite closed up 0.5%. India's Sensex was up 0.3% at midafternoon. MarketWatch (21 Jan.), The Economic Times (India) (26 Feb.)
India's market at 2-year high amid Q3 earnings rebound
India's Sensex rose to its highest level since January 2011 as a string of earnings reports with rising profit suggested that Asia's third-biggest economy is making a comeback. Nearly 80% of firms that have reported results saw their profit grow in the third quarter. Business Standard (India) (21 Jan.), Bloomberg (21 Jan.)
Analysis: Bond markets have good news for Europe
Demand for Spanish and Italian government bonds is growing steadily, and that's good news as "positive contagion" sweeps through Europe, according to The Economist. "Confidence in bond markets is being seen as a turning-point in the crisis," the magazine notes. "Yet some of the vital signs may be misleading. One worry is that the connection between weak banks and weak governments may have strengthened again in recent months." The Economist (tiered subscription model) (19 Jan.)
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Economics
WEF must contend with improving but sluggish economy
More than 2,000 decision-makers worldwide are scheduled to gather this week at the World Economic Forum in Davos, Switzerland. The annual gathering is taking place amid an improving global economy. "There's a sense of relief that the worst didn't happen ... and I think that relief is probably justified," said Nariman Behravesh, IHS Global Insight's chief economist. The Washington Post (tiered subscription model)/The Associated Press (20 Jan.)
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Traders see China's central bank moving toward independence
The People's Bank of China said it will increase the size of open-market operations to bring down volatility in money market interest rates and improve interbank liquidity. The introduction of short-term liquidity operations indicates the central bank is moving toward greater independence and supporting interest-rate reform, traders said. Market News International (18 Jan.)
Euroscepticism is easing in U.K., poll finds
Despite criticism of the EU by British Prime Minister David Cameron, a poll shows that anti-Continent sentiment is fading in the U.K., particularly among those ages 18 to 34. About half of respondents said in May that they would vote to pull the U.K. out of the EU, but in the latest poll, 42% said so. Spiegel Online (Germany) (18 Jan.)
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Large Chinese cities see home prices increase
Housing prices increased in 40 of 70 major cities in China last month compared with December 2011, according to the National Bureau of Statistics. Comparing month on month, prices rose in 54 cities in December and 35 in November. China Daily (Beijing) (19 Jan.)
Political dysfunction is biggest worry of advisers' clients
The most urgent concern of financial advisers' wealthy clients is the inability of U.S. politicians to compromise on taxes and spending, according to two surveys. A survey by UBS Wealth Management Americas found affluent clients frustrated about "fiscal cliff" negotiations. A Reuters survey of advisers found that many of their clients feel the same way. Reuters (18 Jan.)
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Geopolitical/Regulatory
U.S. regulators still have many rules to write
The Commodity Futures Trading Commission is two-thirds done writing 60 rules as mandated by the Dodd-Frank Act. The Securities and Exchange Commission has written 33 of 95 rules. Analysts expect the most important outstanding rules to be finished this year, but the entire process likely will take until at least 2014 to complete. The Trade News (U.K.) (tiered subscription model) (18 Jan.)
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ESM implementation is high on ministers' agenda
This week marks the first meeting this year of Europe's finance ministers, and a key issue on the agenda is the implementation of the European Stability Mechanism. The ESM's purpose is to lend money directly to banks in struggling countries, but there is considerable debate about the best way to achieve that, including whether the ESM should originate loans or take over existing rescue loans. Bloomberg (20 Jan.)
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Foreign banks express concerns about Nibor manipulation
Foreign banks have been e-mailing Norway's financial regulator and central bank about possible manipulation of the Norwegian Interbank Offered Rate. "As a market participant and as one of the largest issuers of Norwegian denominated debt I am writing to complain about the Norwegian fixings," one banker wrote. "They seem to bear no resemblance to market realities and we suspect fixings that resemble market abuse." Bloomberg (18 Jan.)
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U.S. lawmaker says SEC can rein in high-frequency trading
U.S. Rep. Edward Markey, in a letter to the Securities and Exchange Commission, suggests that because of a 1989 law he co-sponsored, the agency has the ability to slow down, or even stop, high-frequency trading. Markey references a law that gives the SEC power to "limit practices which result in extraordinary levels of volatility." Reuters/MacroScope blog (18 Jan.)
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Financial Products
Oaktree and RiverNorth launch high-yield mutual fund
RiverNorth Funds and Oaktree Capital Management have introduced a high-yield mutual fund. About a quarter of the RiverNorth/Oaktree High Income Fund invests in closed-end funds, following an opportunistic strategy. The rest buys U.S. and European high-yield bonds and bank loans. Barron's (free content)/Income Investing blog (17 Jan.)
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