U.K. should stay in EU, German official says | European leaders are optimistic despite challenges | House Republicans are ready to back default, party says
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14 January 2013
CFA Institute: Financial NewsBrief
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Yen drops as Japan pursues aggressive growth strategy
Japan is taking aggressive steps to drive down the yen, and manufacturers are reaping the benefit. The yen has lost 14% of its value against the U.S. dollar since October, and experts expect it to keep falling this year. Prime Minister Shinzo Abe is pressuring the central bank to raise its inflation target to 2%. CNNMoney (13 Jan.), Bloomberg (14 Jan.), The New York Times (tiered subscription model) (13 Jan.)
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U.K. should stay in EU, German official says
German Foreign Minister Guido Westerwelle said his nation wants Britain to remain in the EU, as European leaders anxiously awaited an address this month in which U.K. Prime Minister David Cameron said he will clarify his position on relations with the EU. "With a view to the current debate over Great Britain's role in the EU, I would say: Germany desires a Great Britain that will remain a constructive and active partner in the EU," Westerwelle said. Spiegel Online (Germany) (11 Jan.), The Guardian (London) (13 Jan.)
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European leaders are optimistic despite challenges
German Finance Minister Wolfgang Schaeuble says the eurozone is "over the worst of the crisis." Meanwhile, European Central Bank President Mario Draghi referred to "positive contagion" when he held interest rates firm and set expectations for a "gradual recovery" in late 2013. Bloomberg (14 Jan.), The Washington Post (tiered subscription model)/The Associated Press (11 Jan.)
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House Republicans are ready to back default, party says
House Republican leaders said more than half of their members are ready to force the U.S. government to default on its debt by refusing to raise the debt limit, to pressure President Barack Obama to back spending cuts. An even greater number of House Republicans are ready to shut down the government over the issue, they said. Politico (Washington, D.C.)/Behind the Curtain blog (13 Jan.), Reuters (13 Jan.)
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Citi will launch electronic trading for corporate bonds
Citigroup is responding to customer demand to trade with one another directly by offering Citi Credit Cross, an electronic trading platform for corporate bonds. The system offers customers a route for finding businesses to take the other side of their trades. The Wall Street Journal (tiered subscription model)/MarketBeat blog (11 Jan.)
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China leads gains on Asian-Pacific markets
Asian-Pacific markets rose Monday with China leading the advance -- the Shanghai Composite rose 3.1% and the Shenzhen Composite jumped 3.6%. Hong Kong's Hang Seng Index climbed 0.6%. South Korea's Kospi added 0.5%. Australia's S&P/ASX 200 moved up 0.2%. Taiwan's Taiex edged up 0.1%. India's Sensex was up 1.2% at midafternoon. MarketWatch (14 Jan.), The Economic Times (India) (26 Feb.)
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China National Biotec reportedly plans $1.5B IPO in Hong Kong
China's biggest biotechnology firm, China National Biotec Group, aims to raise $1.5 billion in its initial public offering in Hong Kong, said two people with knowledge of the matter. The company could submit a listing application with the Hong Kong exchange as early as March and begin the offering during the second quarter, they said. Bloomberg (13 Jan.)
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3 MLPs lead strong U.S. IPO market for 2013
High yields are driving robust volume for the initial public offering market as 2013 gets off the ground. Three energy master limited partnerships, which typically generate dividend yields of 6% or higher, are set to go public this week. Bankers and investors expect to see more MLP IPOs in coming months. The Wall Street Journal (tiered subscription model) (13 Jan.)
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Bernanke talk might tip currency markets
Federal Reserve Chairman Ben Bernanke is poised to speak at the University of Michigan about U.S. monetary policy and the global financial crisis. Analysts look at the talk as the first chance to get Bernanke's opinion about the last meeting of the Fed, where some members advocated ending monthly bond purchases. The Wall Street Journal (tiered subscription model) (13 Jan.)
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Economics
U.S. paychecks shrink as tax cut expires
Americans are seeing decreased take-home pay after a 2-year-old tax cut expired. About $125 billion in consumer spending power is expected to disappear from the economy this year as payroll tax increases 2 percentage points. Bloomberg (14 Jan.)
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Import surge drives up U.S. trade deficit
The U.S. trade deficit reached $48.7 billion in November, the highest level in seven months, the Commerce Department says. Increased importation of vehicles and a wide range of consumer goods played a big part. Decreased exports to Europe set back manufacturers. Los Angeles Times (tiered subscription model)/Money & Co. blog (11 Jan.)
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Analysis: Governments could do more to encourage innovation
Warnings that innovation is grinding to a halt are overblown, but governments could remove a few barriers to technological change and give innovators a helping hand, according to The Economist. "Even many regulations designed to help innovation are not working well," the magazine notes. "The West's intellectual-property system, for instance, is a mess, because it grants too many patents of dubious merit." The Economist (tiered subscription model) (12 Jan.)
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Advisers can still help clients cut 2012 taxes
Financial advisers who understand changes made by the American Taxpayer Relief Act can help clients reduce 2012 taxes. A retroactive provision allows some older owners of individual retirement accounts to distribute to charities this year and exclude the amount from 2012 income. InvestmentNews (free registration)/Retirement 2.0 blog (08 Jan.)
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Geopolitical/Regulatory
Regulators seek revamped Euribor process
The European Banking Authority, the European Securities and Markets Authority and the International Organization of Securities Commissions have called for significant change in how the Euro Interbank Offered Rate is overseen. The EBA and ESMA cited deficiency in verifying that data received are accurate. Bloomberg (11 Jan.), Financial News Online (U.K.) (subscription required) (11 Jan.), The Wall Street Journal (tiered subscription model)/Dow Jones Newswires (11 Jan.)
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WTO's role wanes amid failed Doha Round
The biggest economies are increasingly turning away from the World Trade Organization in favor of bilateral and regional agreements, after the Doha Round of negotiations, which had heavy involvement by developing nations, collapsed. Experts say the U.S. and China might be happy to see the WTO decline in importance. Reuters (13 Jan.), Firstpost (India)/Press Trust of India (14 Jan.), Financial Times (tiered subscription model) (13 Jan.)
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EU looks to build harmonized telecom market
EU Digital Agenda Commissioner Neelie Kroes plans to propose reform aimed at creating a unified telecommunication market, to increase investment and competition in the sector. Financial Times (tiered subscription model) (13 Jan.)
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China might give foreign investors more access
Guo Shuqing, chairman of the China Securities Regulatory Commission, says the government might increase quotas of investors who are allowed to purchase mainland securities with offshore yuan. The increase would continue China's rapid opening of capital markets. Reuters (13 Jan.), The Wall Street Journal (tiered subscription model) (13 Jan.)
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Financial Products
Global X readies ETF investing in small-cap MLPs
An exchange-traded fund by Global X Funds that invests in small-cap master limited partnerships is scheduled to begin trading Tuesday on NYSE Arca. The Global X Junior MLP ETF will be linked to a Solactive index that includes MLPs involved in businesses including marketing, transportation, storage, mining and natural-resource production. Barron's (free content)/Focus on Funds blog (11 Jan.), Benzinga.com (11 Jan.), IndexUniverse.com (11 Jan.)
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