G-20 will discuss eurozone banking union and systemic risk | Greek affluent continue to evade taxes, study finds | Japan could face recession, BoJ officials say
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02 November 2012
CFA Institute: Financial NewsBrief
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U.S. business groups clash over response to "fiscal cliff"
Major business groups are taking opposing positions on what actions Congress should take to avert the "fiscal cliff" Jan. 1. The Tax Relief Coalition wants spending cuts to be the principal tool in reducing the deficit. Another business organization is calling for a combination of spending cuts and tax increases. The Washington Post (tiered subscription model)/Wonkblog (01 Nov.)
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G-20 will discuss eurozone banking union and systemic risk
Officials from the Group of 20 nations will discuss Europe's proposed banking union and the nearly 30 banks considered systemically important when they meet next week in Mexico, a German official said. Germany plans to push its insistence that institutions deemed "too big to fail" should never again gain taxpayer-funded rescues. Meanwhile, London fears losing a good portion of its financial-center status by remaining outside the proposed banking union. Bloomberg (01 Nov.), Bloomberg (01 Nov.), The Wall Street Journal (tiered subscription model) (01 Nov.)
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Greek affluent continue to evade taxes, study finds
Despite Greece's desperate financial condition, many affluent self-employed professionals, notably doctors, lawyers, economists, journalists and entertainers, continue to legally evade taxes, according to a study that used data from a major Greek bank. In 2009, self-employed Greeks' unreported income equaled more than 10% of gross domestic product, the study found. Spiegel Online (Germany) (01 Nov.), Kathimerini (Greece) (02 Nov.), Reuters (01 Nov.)
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Japan could face recession, BoJ officials say
Several Bank of Japan board members warned that the economy could slip into recession, according to minutes from a meeting last month. A government representative said at the meeting that the bank needs to achieve visible results in raising consumer inflation toward its 1% goal. Reuters (01 Nov.)
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Judge rules in favor of MF Global's U.K. unit
A U.K. judge ruled that MF Global Holdings' British unit wasn't in default and therefore KPMG, its administrator, could value securities. KPMG had set that disputed value at $60 million, while MF Global's U.S. bankruptcy trustee, James Giddens, said it was $463 million. The legal tussle between the U.S. and U.K. units has put a hold on assets worth more than $1 billion, delaying repayment to creditors and clients. Bloomberg (01 Nov.)
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CBOE Q3 results point to VIX popularity
CBOE Holdings exceeded expectations with third-quarter results because of continued strong demand for its line of investment products linked to stock volatility, including the VIX "fear gauge." "We were especially pleased to see the continued growth of trading in our volatility products, which included record volume in VIX futures," said CEO William Brodsky. He also announced that the exchange's most active traders will soon receive fee discounts. Reuters (01 Nov.), Financial Times (tiered subscription model) (01 Nov.), The Wall Street Journal (tiered subscription model) (01 Nov.)
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Market ActivityAdvertisement
Positive U.S. data boost Asian-Pacific markets
Asian-Pacific markets advanced Friday as favorable economic data from the U.S. encouraged traders. Hong Kong's Hang Seng Index jumped 1.3%. China's Shanghai Composite was up 0.6%. South Korea's Kospi rose 1.1%. Japan's Nikkei 225 advanced 1.1%. Australia's S&P/ASX 200 edged up 0.1%. India's Sensex was up 1% after midday. The Economic Times (India) (26 Feb.), The Wall Street Journal (tiered subscription model) (02 Nov.)
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Quiet FX market might soon see action
Given the time of year and potentially dramatic developments, including the U.S. "fiscal cliff" and Spanish and Greek debt issues, the quiet foreign exchange market could come to life soon, according to Deutsche Bank. Currency strategist George Saravelos expects the euro to soon gain against the U.S. dollar. The Wall Street Journal (tiered subscription model)/MarketBeat blog (01 Nov.)
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Economics
Bloomberg endorses Obama, noting climate-change policy
New York City Mayor Michael Bloomberg, an Independent but a former Republican, endorsed President Barack Obama for re-election, saying Obama is more likely to deal with climate change. Bloomberg wrote in an editorial for Bloomberg View that he thinks climate change contributed to the ferocity of superstorm Sandy, which caused billions of dollars in damage and killed at least 38 New Yorkers. The New York Times (tiered subscription model) (01 Nov.)
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U.S. employment picture brightens
In October, U.S. private-sector employers added the most workers in eight months, according to the ADP Research Institute. Meanwhile, the Labor Department said first-time jobless claims decreased 9,000 last week, to 363,000, the smallest total in three weeks. Economists surveyed by Bloomberg had expected 370,000. Bloomberg (01 Nov.), Bloomberg (01 Nov.)
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Index shows climbing consumer confidence
The Conference Board's consumer-confidence index last month reached its highest level since 2008. The index came in at 72.2, compared with a downwardly revised 68.4 in September. MarketWatch (01 Nov.)
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Analysis: Wealth-management success eases pain at UBS
The strength and profitability of UBS' wealth-management franchise takes much of the sting out of the bank's drastic downsizing of investment banking, according to The Economist. "Analysts at Morgan Stanley reckon that UBS could earn [4.3 billion Swiss francs] after tax from wealth management and retail banking next year -- a juicy 30% return on equity," the magazine notes. "With that kind of fallback, who needs a big investment bank?" The Economist (free content) (03 Nov.)
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IMF gives nod to ECB bond-buyback plan for Greece
The European Central Bank's proposal to buy back Greek bonds has support from the International Monetary Fund if purchases are "implemented in such a way to deliver a meaningful reduction" in the country's debt, IMF spokesman Gerry Rice said. "It is critical for the program's credibility that Greece's debt burden be sustainable," he said. The Wall Street Journal (tiered subscription model)/Dow Jones Newswires (02 Nov.)
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Financial advisers recruit wealthy through YouTube
Financial advisers are finding that high-net-worth investors are interested in watching financially oriented videos on YouTube, and advisers are using the website to introduce themselves. Among investors with $5 million in assets excluding their main home, 27% use YouTube, Spectrem Group found in a study. The Wall Street Journal (tiered subscription model) (01 Nov.)
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Geopolitical/Regulatory
U.S. energy regulator has banks in cross hairs
The Federal Energy Regulatory Commission is making a major effort to deal with suspected manipulation of markets for electricity, natural gas and oil by Wall Street banks. The agency recently threatened to impose its biggest fine in history on Barclays, after taking action against Deutsche Bank and JPMorgan Chase. The New York Times (tiered subscription model)/DealBook blog (01 Nov.), Financial Times (tiered subscription model) (01 Nov.), Reuters/Felix Salmon blog (01 Nov.)
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Spain will continue ban on short selling for 3 months
The Spanish stock market regulator extended a ban on short selling through Jan. 31, to thwart profiting from economic malaise. The prohibition, in force in other European countries as well, began in July. Spain is trudging through its second recession in three years and took big hits this year because of short selling. Reuters (01 Nov.)
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China will let foreign banks act as mutual fund custodians
Foreign banks will soon be cleared to act as custodians in China's mutual fund market. "In order to promote competition in the fund custody market, China plans to open the business to foreign players," according to the China Securities Regulatory Commission. Some foreign bankers say they plan to target clients with cross-border investments. Reuters (01 Nov.)
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Financial Products
RBS readies 5 ETNs tracking Rogers' index series
Royal Bank of Scotland is close to launching five exchange-traded notes linked to the Enhanced Rogers International Commodity Index series, created by investor and financial commentator Jim Rogers. The ETNs are related to commodities, industrial metals, precious metals, energy and agriculture. IndexUniverse.com (01 Nov.), Bloomberg Businessweek (31 Oct.)
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