Kerry reportedly is front-runner to be defense secretary | Computer failure shuts down NYSE trading for 216 stocks | Leucadia will acquire Jefferies
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13 November 2012
CFA Institute: Financial NewsBrief
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IEA: U.S. will be biggest oil producer by 2020
The U.S. will replace Saudi Arabia as the top oil producer by 2020, the International Energy Agency said in a report. Around 2030, the U.S. will become a net exporter of oil and by 2035, it will be almost entirely energy self-sufficient, the agency said. Los Angeles Times (tiered subscription model) (13 Nov.), Houston Chronicle (tiered subscription model)/Loren Steffy blog (12 Nov.), Business Insider (12 Nov.)
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Kerry reportedly is front-runner to be defense secretary
U.S. President Barack Obama is considering offering the job of defense secretary to Sen. John Kerry, The Washington Post reported. The nomination for secretary of state likely will go to Susan Rice, the U.S. ambassador to the U.N., senior officials said. Obama's principal adviser on counterterrorism, John Brennan, is expected to be offered the head position at the CIA, officials said. The Washington Post (tiered subscription model) (12 Nov.), The New York Times (tiered subscription model) (12 Nov.)
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Computer failure shuts down NYSE trading for 216 stocks
A computer failure forced the New York Stock Exchange to suspend trading of 216 securities and cancel their closing auctions. Trading of the affected stocks, which included JPMorgan Chase, U.S. Steel and Travelers, continued on other exchanges. An NYSE Euronext spokesman said trading appeared to be disrupted by a "software programming issue related to the individual server for these 216 symbols." Bloomberg (12 Nov.), Forbes (12 Nov.)
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Leucadia will acquire Jefferies
Leucadia National, a financial-holding company, announced it would acquire Jefferies Group in deal worth about $3.6 billion. Jefferies Chairman and CEO Richard Handler will head the larger, more diverse firm. Financial Times (tiered subscription model) (12 Nov.), The New York Times (tiered subscription model)/DealBook blog (12 Nov.), The Wall Street Journal (tiered subscription model) (12 Nov.)
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Eurozone gives Greece 2 extra years to meet debt targets
Eurozone finance ministers will give Greece two extra years to meet debt-reduction targets, but postponed for a week a decision on releasing Greece's bailout money. International Monetary Fund Managing Director Christine Lagarde said issues relating to Greece's timetable for scaling back its debt needed to be resolved. Kathimerini (Greece) (13 Nov.), Reuters (12 Nov.)
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Rating agencies might face trial in Italy
Sovereign-rating cuts might get their day in court as Italian prosecutors challenge Standard & Poor's and Fitch Ratings regarding recent downgrades. Prosecutors in the southern town of Trani hope to launch a case in a smaller venue, after bigger Italian courts rejected the matter. "The agencies for which we seek trial did not respect the rules of transparency, loyalty and the parameters of quality and efficiency set by European regulators," Trani Chief Prosecutor Carlo Maria Capristo said. Reuters (12 Nov.)
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Market ActivityAdvertisement
Asian-Pacific markets slide amid U.S. and Greek concerns
Anxiety over the economic outlook for the U.S. and Greek economies triggered a wave of selling on Asian-Pacific markets Tuesday. Australia's S&P/ASX 200 and China's Shanghai Composite each fell 1.5%. Taiwan's Taiex dropped 1.8%. Hong Kong's Hang Seng Index lost 1.1%. Japan's Nikkei 225 edged down 0.3%. South Korea's Kospi lost 0.6%. India's Sensex was closed for a holiday. MarketWatch (13 Nov.)
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Wealthy U.S. investors accelerate asset sales
Faced with what could be a substantial increase in the capital gains tax Jan. 1, many high-net-worth individuals are selling assets, wealth advisers said. Their selling will have a disproportionate effect on U.S. financial markets because America's richest 1% control more than half of U.S. stocks. CNBC (12 Nov.)
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FSA looks into rigging allegations in natural gas market
The U.K.'s Financial Services Authority will investigate allegations of manipulation in the nation's wholesale natural gas market. Key benchmarks in gas are set by one price-reporting company, and prices could be inappropriately influenced due to relationships between reporters and traders. Bloomberg (12 Nov.), Financial Times (tiered subscription model) (13 Nov.)
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Economics
White House quietly lobbied firms for debt-deal support
Months before the election, White House aides were already working behind the scenes to persuade business executives, including some on Wall Street, to back President Barack Obama's plan for reducing the deficit and averting the "fiscal cliff." The Obama administration wanted support for a combination of spending cuts and tax increases before beginning talks with Congress. Bloomberg (13 Nov.)
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Corporate earnings rise despite weak revenue
This earnings season has shown that corporate America has been able to increase profit amid flat or declining revenue by squeezing expenses, such as employees' pay. About 70% of 428 companies that have reported third-quarter results have topped analysts' projections for profitability, according to FactSet. The Washington Post (tiered subscription model) (12 Nov.)
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Jobless benefits might end soon for 2M Americans
Unless Congress reauthorizes emergency unemployment assistance by year-end, more than 2 million Americans will lose benefits in December. An additional 1 million will see reduced checks by April if the program lapses. The Washington Post (tiered subscription model) (12 Nov.)
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Chinese banks lend less than expected
October's loan volume at Chinese banks fell short of economists' expectations. A simultaneous increase in bond sales suggests companies were looking beyond banks for capital. Market News International (12 Nov.)
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Encourage growth to ease world tension, Rice says
Source: OpenMarkets
Geopolitical decisions are driven largely by rapid change in developing countries and aftershocks from the global economic downturn and the terrorist attacks of Sept. 11, 2001, former U.S. Secretary of State Condoleezza Rice said. The best way to address growing tension in the world is to ease it by facilitating economic growth, Rice said. She also urged the U.S. to take a proactive role in establishing trade agreements. OpenMarkets.com (12 Nov.), Naples Daily News (Fla.) (12 Nov.), RealClearPolitics (13 Nov.)
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Advisers focus on downside protection
Confronted with global debt worries and the U.S. "fiscal cliff," financial advisers are embracing tactical allocation and other strategies to provide clients with downside protection. Meanwhile, advisers are increasingly concerned about whether any real risk-management benefit exists by allocating investments across asset classes, said Michael Abelson, senior vice president of investments at Genworth Financial Wealth Management, which works with about 6,000 independent advisers. The Wall Street Journal (tiered subscription model) (12 Nov.)
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Geopolitical/Regulatory
EU lawmakers step up pace to meet Basel III deadline
European lawmakers remain committed to implementing standards to meet Basel III capital requirements by a Jan. 1 deadline, accelerating a schedule of meetings on the subject. Even so, some lawmakers say they might have to extend the deadline to February. U.S. regulators recently said they won't be able to implement Basel III by Jan. 1. Reuters (12 Nov.), The Wall Street Journal (tiered subscription model) (12 Nov.)
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Ever-changing regulations frustrate companies
Companies have held off on preparing for new rules, but as a raft of measures take effect -- Basel III, a revised Markets in Financial Instruments Directive and the Dodd-Frank Act -- many might be caught off guard by their wait-and-see approach, Richard Henderson writes. Still, many firms are asking a logical question: How does one prepare for rules that still need to be solidified? The Trade News (U.K.) (tiered subscription model) (12 Nov.)
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EU transparency efforts could aggravate "too big to fail"
Critics say European efforts to flush out secretive asset managers, such as hedge funds and private-equity groups, might actually result in risk being concentrated at fewer players. The Alternative Investment Fund Managers Directive is expected to increase transparency, but it could also push smaller fund managers out of business. Reuters (12 Nov.)
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Financial Products
Calvert mutual fund focuses on emerging-market stocks
Calvert Investments launched a mutual fund giving individual investors exposure to emerging-market equities. The Calvert Emerging Markets Equity Fund uses criteria of corporate responsibility and sustainability to select equities. AdvisorOne (12 Nov.)
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