May leaves door open for postponement of Brexit vote | Fiat Chrysler reportedly to open plant in Detroit | Asian-Pacific markets rebound amid hopes of slower US rate hikes
07 December 2018
CFA Institute: Financial NewsBrief
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Top Stories
Fed has second thoughts about rate increases
Based on an evolving "data dependent" approach to decision-making, the Federal Reserve might postpone interest-rate increases. Officials are discussing whether to indicate a shift toward a wait-and-see approach after a meeting this month.
CNBC (06 Dec.),  The Wall Street Journal (tiered subscription model) (06 Dec.),  BloombergQuint (India) (07 Dec.) 
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May leaves door open for postponement of Brexit vote
British Prime Minister Theresa May has continued to push for a parliamentary vote on her Brexit deal Tuesday but has stopped short of ruling out postponement. Members of May's party have urged her to delay the vote, and a source says she has discussed options with top ministers, including rescheduling the vote.
Politico (06 Dec.),  BloombergQuint (India) (07 Dec.),  The Economist (tiered subscription model) (08 Dec.) 
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Fiat Chrysler reportedly to open plant in Detroit
Fiat Chrysler Automobiles plans to open Detroit's first vehicle assembly line in 27 years, sources said. The company reportedly will renovate an engine plant unused since 2012 to make a three-row Jeep Grand Cherokee for the 2021 model year.
The Detroit News (06 Dec.) 
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Market Activity
Asian-Pacific markets rebound amid hopes of slower US rate hikes
News that the Federal Reserve might slow the pace of interest-rate increases boosted most Asian-Pacific markets Friday. Japan's Nikkei 225 gained 0.8%; Hong Kong's Hang Seng Index dropped 0.4%; Australia's S&P/ASX 200 added 0.4%; China's Shanghai Composite was flat; South Korea's Kospi rose 0.3%; and India's Sensex was up 1%.
CNBC (07 Dec.),  The Economic Times (India) (07 Dec.) 
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China closer to launching Nasdaq-modeled stock market
The Shanghai Stock Exchange plans to launch a technology-innovation board in mid-2019, opening the door to unprofitable companies that work with core technology, such as pharmaceuticals, computing and software. The board is part of the Chinese government's effort to establish a version of Nasdaq.
South China Morning Post (Hong Kong) (07 Dec.) 
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Japan to indict Nissan's Ghosn, sources say
Prosecutors in Tokyo reportedly plan to indict former Nissan Chairman Carlos Ghosn on financial-misconduct charges Monday. Former director Greg Kelly and the company also will be indicted, sources said.
Reuters (06 Dec.),  Nikkei Asian Review (Japan) (tiered subscription model) (07 Dec.) 
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China upbeat on trade talks despite tech exec's arrest
China will "immediately implement the consensus" reached between the country and the US at the Group of 20 summit regarding products including cars, energy and farm products, Chinese Commerce Ministry spokesman Gao Feng says. The statement signals optimism that the arrest of Huawei Technologies' chief financial officer will not disrupt efforts toward a trade agreement.
USA Today/The Associated Press (06 Dec.),  Yahoo/Bloomberg (06 Dec.) 
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Italy mounts debt swap to boost liquidity
The Italian government has tapped holders of a three-year bond to mount a debt swap for €3.2 billion in short-dated debt to improve market liquidity.
Financial Times (subscription required) (06 Dec.) 
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Bitcoin extends collapse, approaches 2018's lowest level
Bitcoin fell 4.7% to $3,549 Thursday and was heading toward its lowest point in over a year, while ripple dropped 5% and ether fell 7%. The Bloomberg Galaxy Crypto Index, which measures the performance of the largest cryptocurrencies, dropped 10% to its lowest level since September 2017.
Bloomberg (tiered subscription model) (06 Dec.) 
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European, US leveraged-loan price indexes slump
Price indexes for leveraged loans in the US and Europe are trading at the lowest levels in two years as concerns grow among lenders about the state of the global economy and the US-Chinese trade dispute. Less than 4% of leveraged loans traded above face value in November, down from over 65% in October, according to JPMorgan Chase.
Bloomberg (tiered subscription model) (06 Dec.) 
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RBC: No-deal Brexit could be costly for derivatives
Canada's RBC Capital Markets has told clients a no-deal Brexit without passporting rights and clearing arrangements could make derivatives netting costlier. "Central counterparties net collateral with the same clearing clients and if this cannot be done on a cross-border basis it may require additional collateral," analyst Robert Noble wrote.
ISF (subscription required) (06 Dec.) 
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Economics
US unemployment claims drop less than predicted
First-time jobless claims in the US declined 4,000 last week to 231,000, short of the 225,000 projected by economists surveyed by Reuters. The four-week moving average increased 4,250, to 228,000, the highest level since mid-April.
Reuters (06 Dec.) 
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Study: Millennials spend less because they don't have money
A study by the Federal Reserve found that the differences in spending between millennials and other age groups are a reflection of millennials' lack of wealth, not their personal values. Millennials "are less well-off than members of earlier generations [were] when they were young, with lower earnings, fewer assets, and less wealth," the study found.
New York magazine (06 Dec.) 
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Geopolitical/Regulatory
SEC's Jackson: Corporate elections should be more transparent
The Securities and Exchange Commission should adopt rules to provide investors more information on how their shares are being voted by fund managers in corporate elections, said Commissioner Robert Jackson Jr. "The SEC's current rules leave investors largely in the dark about how large institutions are voting the shares that underlie American families' savings," he said.
Pensions & Investments (free access for SmartBrief readers) (06 Dec.) 
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OCC studies how to handle failed fintechs with bank charters
The US Office of the Comptroller of the Currency is working out a procedure for when a financial-technology company becomes insolvent after being issued a national bank charter. "One tool for early resolution would be a merger into a nonbank affiliate," said Stephen Lybarger, deputy comptroller for licensing.
MLex (subscription required) (07 Dec.) 
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Custodian banks wait in line for legal opinions
More than a dozen financial institutions are awaiting legal opinions, or so-called blessings, saying they have met requirements to serve as custodian banks qualified to hold collateral for derivatives deals under uncleared margin rules. The need by so many banks to obtain legal opinions could delay implementation of uncleared margin rules.
Practice Insight (06 Dec.) 
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Financial Products
4 ETFs focused on stocks, MLPs debut from Cushing
Cushing Asset Management has brought to NYSE Arca exchange-traded funds investing in stocks and master limited partnerships in four areas of the economy. The Cushing Energy & MLP ETF, the Cushing Utility & MLP ETF, the Cushing Transportation & MLP ETF and the Cushing Energy Supply Chain & MLP ETF select investments from several widely followed sector indexes, as well as the Cushing 30 MLP Index.
ETF (06 Dec.) 
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