Oil production in U.S. rises to a 15-year high | EU transaction tax moves forward without U.K. input | Obama stands by demand for higher tax rates on richest
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05 December 2012
CFA Institute: Financial NewsBrief
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Oil production in U.S. rises to a 15-year high
U.S. monthly oil production in September rose to its highest level since 1998, the Energy Information Administration said. Domestic producers extracted 6.5 million barrels a day, 900,000 daily barrels more than September 2011. The EIA said hydraulic fracturing and horizontal drilling drove the production increase. The Hill/E2 Wire blog (04 Dec.), Oil & Gas Financial Journal (04 Dec.), Grand Forks Herald (N.D.) (04 Dec.)
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EU transaction tax moves forward without U.K. input
The EU is proceeding with a plan for a financial-transaction tax despite objections from the U.K., which wants wording changes to the proposal. The European Parliament and all EU nations must approve the measure before 11 interested countries can proceed. Bloomberg (03 Dec.)
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Obama stands by demand for higher tax rates on richest
President Barack Obama said in an interview with Bloomberg television that there will be no deal in averting the "fiscal cliff" that doesn't include an increase in tax rates for the wealthiest Americans. "We're going to have to see the rates on the top 2% go up, and we're not going to be able to get a deal without it," Obama said. Bloomberg (05 Dec.), Reuters (04 Dec.), CBS News (04 Dec.)
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Plan for eurozone banking union hits obstacles
German Finance Minister Wolfgang Schaeuble cautioned his counterparts about moving too quickly on creating a eurozone banking union, raising doubt that a deal will be struck by year-end. Schaeuble's objection, coming a week before EU leaders are set to meet, might postpone an effort to establish a single banking supervisor. Financial Times (tiered subscription model) (04 Dec.), The New York Times (tiered subscription model) (04 Dec.)
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Asian-Pacific markets gain, with China in the lead
Chinese markets led an increase on Asian-Pacific markets Wednesday, rebounding from a four-year low as bargain hunters picked up property and financial stocks. China's Shanghai Composite advanced 2.9%. Hong Kong's Hang Seng Index rose 2.2%. Japan's Nikkei 225 and Australia's S&P/ASX 200 each added 0.4%. South Korea's Kospi gained 0.6%. India's Sensex was up 0.2% at midafternoon. The Economic Times (India) (26 Feb.), The Wall Street Journal (tiered subscription model) (05 Dec.)
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Russia's VTB will market bond denominated in Australian dollar
Moscow's VTB Capital is close to bringing to market a bond denominated in the Australian dollar on behalf of a Russian issuer. The five-year note is expected to price to yield at 7.5% to 7.6%. Australia and New Zealand Banking Group is assisting with the offering. Bloomberg (04 Dec.), Russia Beyond The Headlines (Moscow) (04 Dec.)
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"Fiscal cliff" concerns ease among global investors
Optimism that U.S. budget debate will eventually lead to avoidance of the "fiscal cliff" prompted investors to increase equity overweight positions to a 20-month high in November in Europe and the U.S., according to a Reuters poll. "All eyes are now on the fiscal cliff, where a muddling-through until the end of [the first quarter] can be expected," said Boris Willems, a strategist at UBS Global Asset Management. Reuters (04 Dec.)
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Economics
ECB is ready to launch bond-buying program, Asmussen says
European Central Bank Executive Board member Joerg Asmussen said the bank is prepared to activate its effort to buy government bonds, the Outright Monetary Transactions program. He told Portuguese newspaper Jornal de Negocios that the ECB is ready to act when there is a need to purchase bonds. Bloomberg (04 Dec.)
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Fed appears close to launching bond-buying round
Economists widely expect the Federal Reserve to announce a round of bond-buying to prop up the shaky U.S. economic recovery and counteract anxiety over whether the "fiscal cliff" can be avoided. Many economists anticipate that at the conclusion of the central bank's policy meetings next week, it will announce bond purchases of $45 billion a month. Reuters (05 Dec.), Financial Post (Canada)/Trading Desk blog (04 Dec.), Financial Times (tiered subscription model) (04 Dec.)
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Few taxpayers claim mortgage-interest deduction
Placing limits on the U.S. mortgage-interest deduction, an idea raised in the debate over how to cut the budget deficit, would have consequences for relatively few homeowners, according to government data. The Internal Revenue Service said only 25% of people filing tax returns claim it. USA Today (05 Dec.)
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Advisers strive for proper tech incorporation
For the first time, having the right technology to make it through difficult times is a top concern of financial advisers, according to the 2012 Scottrade Advisor Services Study. Almost half of advisers polled said the economy has changed how they run their business; as a result, many have updated software or hardware. AdvisorOne (03 Dec.)
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Analysis: Central banks need politicians to set clearer goals
Politicians and central banks have roles in establishing monetary policy, but they are different from each other, according to The Economist. "The decision over whether central banks should target inflation or nominal [gross domestic product] should be made by politicians, not central bankers alone," the magazine notes. "It is not good enough for politicians to call vaguely for 'financial stability': they need to give central bankers more concrete guidance, defined in terms of avoiding asset bubbles, excessive borrowing and large concentrations of risk." The Economist (free content) (01 Dec.)
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CFA Institute report examines impact of internalization and dark pool trading on market quality.
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Geopolitical/Regulatory
Global regulators vow to fix derivative-rule problems
Regulators worldwide recently met in New York and identified potential problems with derivatives rules. "We have identified various potential conflicts, inconsistencies, and duplicative requirements within our respective contemplated rules and we will continue to discuss measures to ameliorate the challenges they raise," the regulators said in the joint statement. For example, the regulators will strive to minimize issues arising from extraterritoriality. Nasdaq.com/Dow Jones Newswires (04 Dec.), Reuters (04 Dec.)
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ESMA's Ross indicates delay with derivatives reform
Verena Ross, executive director of the European Securities and Markets Authority, said at an industry conference that European market participants likely won't face mandatory derivatives clearing before mid-2014. Her comment signals further delay to the global timetable for derivatives reform. Ross also said the buy side should make itself heard more in rule creation. "The buy side has historically only posted collateral, but under the new [over-the-counter] derivatives rules, ESMA is supportive of a two-way system, where collateral moves both ways," she said. The Trade News (U.K.) (tiered subscription model) (04 Dec.), Financial Times (tiered subscription model) (04 Dec.)
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U.K. reports of suspicious trades surge from 2009 level
The U.K. Financial Services Authority says it is on track to have 900 reports of suspicious trading in 2012, triple the number from 2009. However, the regulator doesn't see such data as evidence that market abuse is rampant. "Rather, we think our messaging around the requirement for and importance of market participants submitting [suspicious-trade reports] is hitting home," said Jamie Symington, head of wholesale enforcement. Bloomberg (04 Dec.)
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SEC reportedly investigates stock sale by Big Lots CEO
A $10 million sale of Big Lots stock by CEO Steven Fishman before an announcement that drove down the share price is under investigation by the Securities and Exchange Commission, a person familiar with the matter said. The company says it hasn't been contacted by the SEC and that Fishman's trades were "properly made." American City Business Journals/Columbus, Ohio (04 Dec.), The Wall Street Journal (tiered subscription model) (04 Dec.)
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Financial Products
DoubleLine readies bank-loan mutual fund
DoubleLine Capital aims to bring a mutual fund investing in bank loans to the retail market in 2013. The preliminary prospectus filed with the Securities and Exchange Commission says that in addition to loans, the DoubleLine Floating Rate Fund would also be allowed to invest in inflation-indexed securities, as well as mortgage-backed securities and other asset-backed securities. InvestmentNews (free registration) (03 Dec.)
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Ethics
Ranking: New Zealand, Denmark, Finland have lowest corruption
Transparency International's ranking of public corruption has the U.S. as the 19th-least-corrupt country. Nations faring better include Canada, Hong Kong, Germany and the Netherlands. Denmark, Finland and New Zealand are tied for "cleanest," the organization says. CNBC (05 Dec.), Reuters (05 Dec.)
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