Opposition mounts to Europe's proposed transaction tax | Panel suggests creation of small-business exchange | FCC plan of free Wi-Fi pits tech firms against telecoms
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04 February 2013
CFA Institute: Financial NewsBrief
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Closing tax loopholes could be key to budget deal, Obama says
President Barack Obama said future deals with Congress on the U.S. budget could set aside the option of raising tax rates and, instead, focus on eliminating tax loopholes and deductions to reduce the deficit. "I don't think the issue right now is raising rates," Obama said. The New York Times (tiered subscription model) (03 Feb.), CBS News/Political Eye blog (03 Feb.), The Washington Post (tiered subscription model)/The Associated Press (03 Feb.)
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Opposition mounts to Europe's proposed transaction tax
Experts and industry groups are increasingly voicing opposition to a proposed tax on financial transactions in Europe. Noel Amenc, an EDHEC Business School professor, told EU Internal Market Commissioner Michel Barnier in a letter that the tax would increase the price of capital. "The theoretical arguments in support of [financial-transaction tax] as a measure to reduce volatility are, at best, mixed," Amenc wrote. The European Commission is scheduled to present a plan Feb. 14. Financial News Online (U.K.) (subscription required) (01 Feb.), Bloomberg (01 Feb.)
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Panel suggests creation of small-business exchange
A Securities and Exchange Commission panel suggested that an exchange limited to small businesses should be created. The exchange would make it easier for companies to go public in the U.S. but would be limited to experienced investors better able to assess the risks involved with lower disclosure hurdles. Bloomberg (01 Feb.)
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FCC plan of free Wi-Fi pits tech firms against telecoms
The Federal Communications Commission's proposal for a system of public Wi-Fi networks offering free telephone calls and Internet service across the U.S. has triggered fierce backlash from the wireless industry, which is trying to persuade the regulator to reconsider the plan, analysts said. Google, Microsoft and other high-tech firms back free-for-all Wi-Fi, saying it would stimulate creation of services that would benefit all Americans, particularly those with modest income. The Washington Post (tiered subscription model) (03 Feb.)
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Rising Treasury yields could be next roadblock to recovery
Treasury yields are rising above record lows, sending U.S. government bond prices falling and potentially creating an obstacle for economic recovery. Business investment, car sales and the housing market could suffer as bonds lose favor with investors. Reuters (03 Feb.), Bloomberg (02 Feb.), MarketWatch (01 Feb.)
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Market ActivityAdvertisement
U.S. jobs report leaves Asian-Pacific markets mixed
Asian-Pacific markets were mixed Monday after payroll data pointed to some improvement in the U.S. economy. Japan's Nikkei 225 gained 0.6%. Hong Kong's Hang Seng Index and South Korea's Kospi each fell 0.2%. China's Shanghai Composite advanced 0.4%. Australia's S&P/ASX 200 gave up 0.3%. India's Sensex was down 0.2% in afternoon trading. MarketWatch (04 Feb.)
Asiacell raises $1.3B in IPO on Iraq Stock Exchange
Marking the biggest Middle East initial public offering since 2008, mobile phone operator Asiacell Communications raised $1.3 billion on the Iraq Stock Exchange. Rabee Securities, which managed the offering, said foreign investors bought 70% of the shares sold, with Iraqi investors acquiring the rest. Bloomberg (03 Feb.), The National (Abu Dhabi, United Arab Emirates) (04 Feb.)
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Economics
U.S. payrolls kept growing in January
U.S. employers hired 157,000 workers in January, and job creation in November and December was better than previously thought, the Labor Department reported. The upward revisions added 127,000 jobs to the total employment growth during the last two months of 2012. Bloomberg (02 Feb.)
Manufacturing growth accelerates in the U.S.
The Institute for Supply Management said its index of U.S. factory activity rose from 50.2 in December to 53.1 in January, its highest reading in nine months. The index for new orders jumped from 49.7 to 53.3. Reuters (01 Feb.)
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Companies increase pension contributions amid low rates
The Federal Reserve's low interest rates are forcing U.S. companies to increase cash put into defined-benefit pension plans. Employers are bound by law on how long they take to fully fund pensions. Ford Motor expects to put $5 billion into its plan this year, nearly the amount it spent on developing products, buying equipment and building plants last year. The Wall Street Journal (tiered subscription model) (03 Feb.)
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Analysis: Waterway neglect jeopardizes U.S. economy
The ability of the U.S. to compete in the global economy is being put at risk by inadequate investment in waterways, according to The Economist. "Like much of America's infrastructure, its ports, locks, dams and inland waterways are old, underinvested in, and too often ignored -- to the cost of the businesses that depend on them, and the consumers both in America and abroad who buy things that pass through them," the magazine notes. The Economist (tiered subscription model) (02 Feb.)
FINRA wants easier background check on advisers and brokerages
The Financial Industry Regulatory Authority proposed a rule to make it easier for investors to investigate the background of financial advisers and brokerages. The rule would require websites of companies regulated by FINRA to link to the agency's online database BrokerCheck. Reuters (01 Feb.)
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Chinese services sector posts strongest growth since August
Fueled by construction and retail sales, China's services sector expanded last month at its fastest rate since August. The National Bureau of Statistics and the China Federation of Logistics and Purchasing say their nonmanufacturing purchasing managers' index reached 56.2, compared with 56.1 in December, on a scale in which anything higher than 50 indicates growth. Bloomberg (03 Feb.)
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Geopolitical/Regulatory
Iran is open to direct talks with U.S. on nuclear program
Iranian Foreign Minister Ali Akbar Salehi called U.S. Vice President Joe Biden's suggestion of direct talks with the U.S. regarding Iran's nuclear program a "step forward." Salehi complained that U.S. officials send "contradictory signals" when they indicate that they will use force to prevent Iran from developing nuclear weapons. Reuters (03 Feb.), Tehran Times (Iran) (03 Feb.), Al Jazeera (03 Feb.)
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ESMA allows some short selling but not naked sovereign CDS
The European Securities and Markets Authority decided to exempt market makers from certain, tougher rules pertaining to short selling. However, ESMA didn't bend on trading of naked sovereign credit default swaps. Bloomberg Businessweek (01 Feb.)
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EU lawmakers might make "precedent-setting" decision on EMIR
The European Parliament's Economic and Monetary Affairs Committee is set to vote on the European Market Infrastructure Regulation and is expected to reject crucial details of the derivatives reform. The development could be "precedent setting" for the region's policymaking process, experts say. "This is definitely new territory -- this has never happened before," said Tim Gieles, a manager at Cicero. "It's clear the European Parliament wants to take big and bold action." Financial News Online (U.K.) (subscription required) (04 Feb.)
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EU and U.K. are stronger together, Barnier says
EU Internal Market Commissioner Michel Barnier urged the British people to remain committed to the EU "joint project," while warning against protectionism and fragmentation. Financial Times (tiered subscription model) (01 Feb.)
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Financial Products
Deutsche Bank aims to launch utility-stock ETF
Deutsche Bank filed with the Securities and Exchange Commission to introduce an exchange-traded fund that would buy the stock of utility companies. The db-X Regulated Utilities Index Fund would allocate at least 80% of funds to securities in the DBIQ Regulated Utility Index. IndexUniverse.com (31 Jan.)
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