Talks will begin on trade agreement with EU, Obama says | Comcast plans to acquire rest of NBCUniversal | China's CNOOC gets approval to buy Nexen's U.S. assets
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13 February 2013
CFA Institute: Financial NewsBrief
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Obama calls for legislation to bolster middle class
In his State of the Union address, President Barack Obama proposed a long list of economic initiatives, including raising the U.S. minimum wage to $9 an hour, creating "manufacturing-innovation institutes" and increased investment in clean energy. He said it is the task of today's generation to "reignite the true engine of America's economic growth -- a rising, thriving middle class." Good middle-class job creation "must be the North Star that guides our efforts," Obama said. The Washington Post (tiered subscription model) (12 Feb.), USA Today (13 Feb.), Los Angeles Times (tiered subscription model)/Politics Now blog (12 Feb.)
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Talks will begin on trade agreement with EU, Obama says
President Barack Obama said in his State of the Union address that formal negotiations will begin soon that could bring the U.S. and EU together in a trans-Atlantic free-trade zone. House Ways and Means Committee Chairman Dave Camp, R-Mich., applauded the move as an important step toward creating good jobs for Americans. The Hill/On the Money blog (12 Feb.), Financial Times (tiered subscription model) (13 Feb.)
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Comcast plans to acquire rest of NBCUniversal
Comcast said it will pay General Electric $16.7 billion for the 49% equity stake in NBCUniversal it does not already have. Comcast's purchase of NBCU was originally expected to take several years to complete. Comcast CEO Brian Roberts said the growing need in the television business to own content and delivery systems accelerated the process. The New York Times (tiered subscription model)/Media Decoder blog (12 Feb.)
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China's CNOOC gets approval to buy Nexen's U.S. assets
The Committee on Foreign Investment in the U.S. gave approval to China's largest offshore oil and gas producer, CNOOC, to acquire U.S. oil and gas assets of Canadian energy firm Nexen. The decision clears the way for CNOOC to take over Nexen for $15.1 billion. Gulf of Mexico oil and gas operations account for about 8% of Nexen's production. Bloomberg (12 Feb.)
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BATS aims to become U.K. recognized investment exchange
BATS Chi-X Europe has submitted an application to become a recognized investment exchange in the U.K. The move is a renewed challenge to Deutsche Boerse, London Stock Exchange Group, NYSE Euronext and other traditional venues. Approval is required from the Office of Fair Trading and the Financial Services Authority. Bloomberg (12 Feb.), Financial Times (tiered subscription model) (13 Feb.)
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Moody's warns of forced European CMBS sales
European commercial mortgage-backed securities might come under heavy selling pressure, according to Moody's Investors Service. "Fire sales could be necessary to ensure that recovery proceeds reach the noteholders before the maturity of the notes," analysts wrote. Bloomberg (12 Feb.)
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T. Rowe Price joins opposition to Dell LBO
Mutual fund giant T. Rowe Price said it opposes Michael Dell's plan to take Dell private in a leveraged buy-out. T. Rowe Price joins Southeastern Asset Management and smaller shareholders in criticizing the deal. Holders of about 19% of the computer company's shares that are independent are against the deal. The New York Times (tiered subscription model)/DealBook blog (12 Feb.)
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Market Activity
Most Asian-Pacific markets gain; Australia at 4-year high
Most of the Asian-Pacific markets open for trading rose Wednesday. Australia's S&P/ASX 200 gained 0.9%, closing at 5,003.70, its highest reading in more than four years. Japan's Nikkei 225 fell 1%. South Korea's Kospi jumped 1.6%. India's Sensex rose 0.2%. Exchanges in Hong Kong, Taiwan and China remained closed for Lunar New Year. MarketWatch (13 Feb.)
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Search for high returns triggers European high-yield bond boom
Fund managers seeking higher-yielding assets are sending cash to Europe, including areas locked out of the bond markets during much of 2012, as they dramatically increase purchases of high-yield bonds issued in the region. European companies with below-investment-grade credit ratings issued almost $16 billion in bonds last month, the most for any January in history. The Wall Street Journal (tiered subscription model) (12 Feb.)
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Italy tests demand for 30-year debt
Italy is offering a 30-year bond for the first time since May 2011. The auction will give the government an idea of whether investors are worried about an upcoming national election. The sale is offering €6.75 billion in debt, with maturity as short as thee years. Reuters (13 Feb.)
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CFA Institute: Fourth Annual Middle East Investment Conference
20?21 March 2013
Jumeirah Emirates Towers
Dubai, United Arab Emirates

Hosted with CFA Society Emirates

Register by 20 February 2013 and save US$100.
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Economics
U.S. makes surprise shift to budget surplus
Economists were caught by surprise when the U.S. budget, for the first time in five years, posted a surplus for January. The $3 billion surplus reduced the cumulative deficit for this fiscal year by 17%. The Congressional Budget Office says the government received an extra $9 billion because a payroll-tax reduction expired Dec. 31. Reuters (12 Feb.)
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Analysis: U.S. cuts deficit without facing long-term problem
The U.S. is cutting its budget deficit, but Congress' inability to control spending on entitlements means public debt will increase to 87% of gross domestic product by 2023, up from 73%, according to The Economist. "Cutting discretionary spending is politically appealing because it arouses less anger than cutting entitlements or raising taxes, and because the specifics are left to congressional negotiators each year," the magazine notes. "Yet it is hardly ideal for the economy." The Economist (tiered subscription model) (09 Feb.)
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Study: Majority of advisers plan to boost tech spending
About half of financial advisers have decided to increase spending on technology, according to the 2013 InvestmentNews Adviser Technology Study. Among respondents, 51% anticipate increasing spending this year, 41% intend to hold spending at the 2012 level and 8% plan to reduce spending. InvestmentNews (free registration) (10 Feb.)
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CFA Institute Conference: Wealth Management 2013
21?22 March 2013
The Westin Boston Waterfront
Boston, Massachusetts, United States

Hosted with Boston Security Analysts Society

Register by 21 February 2013 and receive a US$200 discount.
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Geopolitical/Regulatory
Fed presidents say industry's money-fund ideas aren't enough
The presidents of the 12 regional Federal Reserve banks wrote in a letter to the Financial Stability Oversight Council that industry-backed ideas such as "redemption gates" are not enough to stabilize money market mutual funds. "[W]e do not believe this reform proposal contains the fundamental elements needed to address the financial stability risks posed by MMFs," according to the letter. Reuters (12 Feb.)
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U.S. agency finds significant error in 26% of credit reports
A study by the Federal Trade Commission says 26% of consumers have identified at least one significant error in their credit report. Among those who successfully got their report corrected, 13% received an improved credit score. The Washington Post (tiered subscription model) (12 Feb.)
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DTCC: Data-sharing obstacles might hamper regulatory progress
Although Depository Trust & Clearing is seeking to become a worldwide derivatives-data repository, differences between U.S. and EU law are proving difficult to overcome, the company says. "There are fairly major impediments to data sharing at the moment," said Stewart Macbeth, president of DTCC unit Deriv/SERV. Reuters (12 Feb.)
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U.S. reportedly examines 2 U.K. interdealer brokers over Libor
The U.S. Justice Department and the Commodity Futures Trading Commission are investigating U.K. interdealer brokers ICAP and R.P. Martin Holdings regarding their possible role in manipulation of the London Interbank Offered Rate, sources say. Neither firm has been accused of wrongdoing. ICAP is also being questioned by the U.K. Financial Services Authority. Reuters (12 Feb.), The Wall Street Journal (tiered subscription model) (11 Feb.)
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UBS faces FSA fine tied to sales of AIG fund
The U.K. Financial Services Authority says UBS was at fault for exposing customers to "an unacceptable risk of an unsuitable sale" by selling an American International Group investment fund. The FSA faults UBS for a lack of due diligence and failure to handle complaints correctly. "We are pleased that we can put this issue that dates back to 2008 behind us, so that we can continue to focus on serving our clients and executing our strategy," UBS said. Financial News Online (U.K.) (subscription required) (12 Feb.), The New York Times (tiered subscription model)/DealBook blog (12 Feb.), Reuters (12 Feb.), Financial Times (tiered subscription model) (12 Feb.)
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Financial Products
Van Eck debuts ETF investing in business-development companies
Van Eck Global has brought to NYSE Arca an exchange-traded fund that buys shares of business-development companies. The Market Vectors BDC Income ETF, linked to the proprietary Market Vectors US Business Development Companies Index, invests in 25 companies that have a weighted average market capitalization of $2 billion. IndexUniverse.com (11 Feb.), Benzinga.com (12 Feb.), The Wall Street Journal (tiered subscription model)/Deal Journal blog (12 Feb.)
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