Obama and Boehner begin one-on-one "fiscal cliff" talks | Mortgage law's expiration threatens housing recovery | Apple will begin manufacturing Macs in the U.S.
07 December 2012
CFA Institute: Financial NewsBrief

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Obama and Boehner begin one-on-one "fiscal cliff" talks
President Barack Obama and U.S. House Speaker John Boehner are now the sole participants in discussions aimed at averting the "fiscal cliff." Senators and Rep. Nancy Pelosi were removed from the talks at Boehner's request, congressional aides said. The New York Times (free-article access for SmartBrief readers) (06 Dec.)
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Mortgage law's expiration threatens housing recovery
A major factor in the U.S. housing recovery is a law passed five years ago that suspends the tax liability on lenders' debt forgiveness when underwater homeowners want to sell their property. That law is set to expire at year-end and no action is underway in Congress to renew it. CNBC/Realty Check blog (06 Dec.), eCreditDaily.com (06 Dec.), TheStreet.com (06 Dec.)
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Apple will begin manufacturing Macs in the U.S.
Apple is the latest American company to bring jobs sent offshore years ago back to the U.S. CEO Tim Cook said Apple will make a $100 million investment to begin producing some Mac computers domestically. The New York Times (free-article access for SmartBrief readers) (06 Dec.), San Jose Mercury News (Calif.) (free registration) (06 Dec.), Bloomberg Businessweek (06 Dec.)
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Big Lots CEO faces inquiry over stock sale
Federal prosecutors are conducting a criminal investigation into Big Lots CEO Steven Fishman's sale of $10 million of stock before a company announcement that led to a drop in the share price. Big Lots said in a filing with the Securities and Exchange Commission that a grand-jury subpoena was issued by the U.S. Attorney's Office in Manhattan for records relating to the sale. The Wall Street Journal (tiered subscription model) (06 Dec.)
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Asian-Pacific markets mixed as traders await U.S. jobs data
Asian-Pacific markets were mixed Friday as investors took cautious positions awaiting the release of data on the U.S. labor market. Hong Kong's Hang Seng Index edged down 0.3%. China's Shanghai Composite rose 1.6%. Japan's Nikkei 225 slid 0.2%. South Korea's Kospi advanced 0.4%. Australia's S&P/ASX 200 added 0.9%. India's Sensex was down 0.4% at midafternoon. MarketWatch (07 Dec.), The Economic Times (India) (26 Feb.)
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France gets record-low yield in $5.2B bond sale
France's cost of borrowing fell to a record low in the sale of $5.2 billion of bonds. Benchmark 15-year bonds sold at an average yield of 2.56%, less than the previous record low of 2.85%. Yields also fell for six- and seven-year maturities. Bloomberg (06 Dec.)
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Major fund managers cut exposure to investment-grade debt
Worried that yields on high-quality U.S. corporate debt are so low that there's no room for gains, some of the biggest fund managers are scaling back exposure to investment-grade bonds. Fearful that even a small increase in interest rates could trigger major losses, some are shifting funds to European debt and the highest-yielding bonds. The Wall Street Journal (tiered subscription model) (06 Dec.)
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BoE holds quantitative easing and rates
With the U.K. economy poised between growth and contraction and questions about the effectiveness of the Bank of England's quantitative easing, the central bank has decided not to extend the program. The BoE also decided to leave interest rates at a record-low 0.5%. BBC (06 Dec.)
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ECB forecasts eurozone contraction through 2013
European Central Bank President Mario Draghi says his staff has reduced growth projections for this year and next. The expectation is that the eurozone economy will shrink 0.5% in 2012 and 0.3% in 2013. For 2014, the ECB expects a return to growth, at 1.2%. Reuters (06 Dec.), The Telegraph (London) (tiered subscription model) (06 Dec.)
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Initial jobless claims fall off faster than expected
First-time unemployment claims in the U.S. posted a sharp drop last week, as the effects of superstorm Sandy faded more quickly than most experts anticipated. Initial claims for unemployment insurance totaled 370,000 last week, down from the previous week's revised 395,000, the Labor Department said. Los Angeles Times (tiered subscription model) (06 Dec.), The Christian Science Monitor/The Paper Economy blog (06 Dec.), American City Business Journals/New York (06 Dec.)
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Analysis: U.K. appears to favor EU withdrawal
The U.K.'s Conservative Party, which leads the governing coalition, seems ready to embrace an EU exit. The action would be a reckless gamble on Britain's future, according to The Economist. "Difficult and often humiliating as it may be, the best course is to stick close to Europe, and try to bend it towards Britain," the magazine notes. The Economist (free content) (08 Dec.)
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Young affluent willing to switch advisers for better tech
Young, wealthy investors don't hesitate to change financial advisers to benefit from technology such as video conferencing, as well as better performance, according to a survey by Cisco Systems. Among respondents younger than 55, only 25% are satisfied with the way their adviser communicates, the survey found. Barron's (free content)/Penta Daily blog (06 Dec.), AmericanBanker.com (free content) (06 Dec.)
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SEC lets actively managed ETFs use derivatives
Norm Champ, director of the Securities and Exchange Commission's investment-management division, says the regulator will drop a blanket prohibition on use of a significant amount of derivatives by actively managed exchange-traded funds. Instead, the SEC will bar derivatives use to increase returns or deliver the inverse performance of an index, he said. Bloomberg (07 Dec.)
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CFTC might delay overseas swaps rules
The Commodity Futures Trading Commission is considering postponing some overseas swaps rules as mandated by the Dodd-Frank Act, sources say. After postponing other rules, CFTC officials have indicated that more delays are likely. "We have and will continue to grant requests for phased compliance," Chairman Gary Gensler said. Not everyone supports postponement. Commissioner Scott O'Malia says the CFTC's rule-making process has started to "resemble Swiss cheese." Bloomberg (06 Dec.)
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U.S. power regulator isn't targeting Wall Street, chief says
Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, says recent enforcement action shouldn't be taken as a sign that the agency is out to get Wall Street. "We're not trying to push anybody out of any business," he said. "We're just trying to make sure that the markets are operating fairly and that there is a minimum of fraud and manipulation." Reuters (06 Dec.)
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SEC study: Debt issuers would be fine under money-fund revamp
Cities, states and businesses that issue short-term debt would not be harmed by proposed money-fund rules, according to a study by the Securities and Exchange Commission. The study contradicts claims by the mutual fund industry that the rules would disrupt markets for short-term debt and hurt the economy. Bloomberg (06 Dec.)
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Regulators are wiping out investors' returns, group says
Regulators' demands on banks are destroying returns and eliminating any reason investors might have to buy their shares, according to a report by the Association of British Insurers. Banks will have to double profits to cope with the cost of higher capital requirements and structural changes, the report says. The Telegraph (London) (tiered subscription model) (07 Dec.)
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Financial Products
T. Rowe Price joins scramble to launch ultra-short bond funds
T. Rowe Price brought a mutual fund investing in ultra-short bonds to the retail market, taking advantage of demand for higher yields than those offered by money market funds. Financial Times (tiered subscription model) (06 Dec.), MutualFundWire.com (05 Dec.), Bloomberg (06 Dec.)
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Iran sanctions settlements will cost $670M, StanChart says
Standard Chartered expects that settlements with U.S. authorities regarding allegations of violating Iranian sanctions will total $670 million. "The group remains in active and constructive discussions with the other U.S. agencies on the resolution of the group's historical U.S. sanctions compliance," the bank says. The Guardian (London) (06 Dec.)
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