Technical problems affect Boeing's Dreamliner | DISH tops Sprint's bid for Clearwire | Euribor contributors might exit amid difficulty and liability
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09 January 2013
CFA Institute: Financial NewsBrief
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U.K. execs urge Cameron not to back EU pullout
British Prime Minister David Cameron risks damaging U.K. businesses if he pursues withdrawal from the EU, 10 business leaders wrote in a letter to the Financial Times. The executives agree on a need to reform the EU but say the U.K. should avoid calling for far-reaching membership renegotiation. Reuters (09 Jan.), Financial Times (tiered subscription model) (08 Jan.)
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Technical problems affect Boeing's Dreamliner
Boeing's 787 Dreamliner, key to the aircraft manufacturer's strategy for increasing profit, suffered a setback when a fuel leak forced Japan Airlines to return an aircraft to the gate just before takeoff from Boston. The leak was the latest in a series of technical malfunctions involving the passenger liner that went into commercial service in November 2011. Boeing's share price dropped 2.6% in New York trading Tuesday. The New York Times (tiered subscription model) (08 Jan.), Chicago Sun-Times (free registration) (09 Jan.), Forbes (08 Jan.)
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DISH tops Sprint's bid for Clearwire
DISH Network made a tentative offer of $3.30 per share for wireless company Clearwire, slightly more than Sprint Nextel's offer of $2.97 a share. DISH Chairman Charlie Ergen says the offer is part of a move to get into the wireless-broadband market. Clearwire says DISH's offer faces several conditions and uncertainties. Reuters (09 Jan.)
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Euribor contributors might exit amid difficulty and liability
Rabobank Groep's departure from contributing to the Euro Interbank Offered Rate might spark a wider exit, said Cedric Quemener, director of Euribor-EBF. Rabobank says a decline in interbank lending has made it difficult to calculate the benchmark, and others note the legal liability and regulatory burden associated with it. Bloomberg (08 Jan.)
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Nasdaq, NYSE likely will delay "circuit breakers" launch
Nasdaq OMX Group and NYSE Euronext notified customers this week that "circuit breaker" measures intended to prevent significant market swings might be delayed to April 8 to give firms more time to adjust. The measures, originally scheduled to go into effect in early February, are a response to the 2010 "flash crash." The Wall Street Journal (tiered subscription model)/Dow Jones Newswires (07 Jan.)
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Goldman group reportedly involved in proprietary trading
Multi-Strategy Investing, a unit of Goldman Sachs Group, invests about $1 billion of Goldman funds on stocks and bonds despite the bank's recent assurances that it no longer engages in such activities, say sources who worked for or with MSI. The group is an indication of how Goldman works around regulations designed to rein in proprietary activities, Bloomberg reports. Bloomberg (08 Jan.)
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Lew reportedly is likely choice for U.S. Treasury chief
White House Chief of Staff Jack Lew might succeed Timothy Geithner as Treasury secretary, sources say. Lew is said to have helped supervise White House strategy during budget negotiations while keeping Wall Street executives up to date. Bloomberg (08 Jan.)
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Market Activity
Asian-Pacific markets rise as earnings season starts
Most share markets advanced Wednesday in Asia-Pacific after Alcoa reported profit for the fourth quarter, launching earnings season on an optimistic note. Japan's Nikkei 225 gained 0.7%. Hong Kong's Hang Seng Index rose 0.5%. China's Shanghai Composite closed unchanged. Taiwan's Taiex edged up 0.2%. Australia's S&P/ASX 200 added 0.4%. South Korea's Kospi slid 0.3%. India's Sensex declined 0.4%. MarketWatch (09 Jan.), The Economic Times (India) (26 Feb.)
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Economics
U.S. forecasts significant decline in oil imports
The Energy Information Administration says U.S. oil imports will decline to 6 million barrels a day next year, the smallest amount since 1987. Financial Times (tiered subscription model) (08 Jan.)
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Researchers: Social Security office hides fiscal bomb
Obsolete forecasting techniques used by the U.S. Social Security Administration have concealed how soon the government program will run out of money, two researchers say. Social Security's trust funds will be empty two years earlier than the government's 2033 estimate, said Gary King of Harvard University and Samir Soneji of Dartmouth College. AdvisorOne (08 Jan.), MSN Money (08 Jan.), The New York Times (tiered subscription model) (05 Jan.)
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Economists doubt BoE will loosen money
In a survey, economists predicted that the Bank of England will not further loosen monetary policy. Though the U.K. risks another recession, economists find it unlikely that a money-printing program, halted in November, will resume. Reuters (08 Jan.)
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Eurozone unemployment reaches record high
Unemployment in the eurozone increased from 11.7% in October to 11.8% in November, the highest level on record, according to the EU's statistics office. EU-wide, joblessness held at 10.7%. Youth unemployment topped 50% in Spain and Greece. European Voice (Brussels) (tiered subscription model) (08 Jan.)
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German companies brace for pay-increase demands
After years of wage restraint, Germany's trade unions are preparing to call for large pay increases this year, and they are getting more support than usual. Many economists say it is time for employers to allow substantial salary increases. Adjusted for inflation, most German workers have less disposable income than they did 10 years ago. Der Spiegel (Germany) (English online version) (08 Jan.)
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Geopolitical/Regulatory
Fed might ease derivatives regulation for foreign banks
The Federal Reserve is considering letting major non-U.S. banks sidestep regulatory changes intended to prevent taxpayers from subsidizing derivatives trading. Financial Times (tiered subscription model) (08 Jan.)
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FINRA will focus on high-speed trading and complex products
Richard Ketchum, head of the Financial Industry Regulatory Authority, says the agency will increase scrutiny of high-speed trading, complex products, leveraged loans, collateralized loan obligations and conflicts of interest among brokers when they pitch their investments over rivals' products. FINRA filed more than 1,500 enforcement actions against brokers and financial firms last year -- a record -- and imposed more than $100 million in penalties. The New York Times (tiered subscription model)/DealBook blog (08 Jan.), The Wall Street Journal (tiered subscription model) (08 Jan.)
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Chinese regulator reportedly intensifies IPO scrutiny
The China Securities Regulatory Commission is requiring underwriters and auditors of companies applying for an initial public offering on the mainland to re-examine financial statements, sources say. Self-inspection, which will continue through March, reportedly aims to improve the quality of listed companies. Reuters (09 Jan.)
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Analysis: Cabinet could become problem for Japan's Abe
Japanese Prime Minister Shinzo Abe's Cabinet is so extreme in conservatism and nationalism that, in time, it could hinder economic revival, according to The Economist. "Abe must hold his nerve on China, but rein in his own nationalist instincts, and keep the ghosts of the past locked safely in the [Liberal Democratic Party's] cellar," the magazine notes. "Such restraint would always have been difficult; Mr Abe's new cabinet makes it almost impossible." The Economist (free content) (05 Jan.)
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Financial Products
Artivest designs ETF to profit from resource scarcity
Artivest Advisers filed with the Securities and Exchange Commission to launch an exchange-traded fund that would invest in stocks and fixed-income securities likely to benefit from global resource scarcity. The actively managed Commodities Supercycle Artivest Trust ETF would take long and short positions in securities whose performance is influenced by commodity-price movement, according to the filing. IndexUniverse.com (08 Jan.)
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