US formally starts withdrawal from Paris climate pact | US firms receive 3-year exemption from EU research rules | Dow climbs to record as recession concerns fade
05 November 2019
CFA Institute: Financial NewsBrief
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US reportedly weighs ending tariff on $112B in Chinese goods
The US might lift a tariff on $112 billion in Chinese imports as a concession to reach a "phase one" trade agreement, sources say. The US and China reportedly have agreed in principle to a deal that includes ending the 15% tariff, which took effect in September.
MarketWatch (04 Nov.),  Financial Times (subscription required) (05 Nov.),  The Wall Street Journal (tiered subscription model) (04 Nov.) 
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US formally starts withdrawal from Paris climate pact
The US has filed paperwork to withdraw from the Paris climate accord. The agreement requires one year's notice, so the actual withdrawal does not occur until November 2020.
Politico (04 Nov.),  BNN Bloomberg (Canada) (04 Nov.) 
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US firms receive 3-year exemption from EU research rules
The Securities and Exchange Commission will not initiate action against US firms for failing to comply with EU rules on investment research until at least 2023. The SEC says it needs more time to evaluate how the revised Markets in Financial Instruments Directive affects the way firms charge clients for research.
BNN Bloomberg (Canada) (04 Nov.) 
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Dow climbs to record as recession concerns fade
The Dow Jones Industrial Average has followed the S&P 500 and the Nasdaq composite by hitting a record high Monday, the first peak since July. Strong corporate earnings, positive economic news, rising optimism about a US-Chinese trade deal and fading recession concerns are cited as factors.
Forbes (04 Nov.),  CNBC (04 Nov.),  The Wall Street Journal (tiered subscription model) (04 Nov.) 
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Market Activity
Japan leads gains on Asian-Pacific markets
Asian-Pacific stock markets advanced Tuesday after a strong close on Wall Street. Japan's Nikkei 225 climbed 1.8%; Hong Kong's Hang Seng Index and China's Shanghai Composite each rose 0.5%; Australia's S&P/ASX 200 gained 0.2%; South Korea's Kospi added 0.6%; and India's Sensex was down 0.1%.
CNBC (05 Nov.),  The Economic Times (India) (11 Nov.) 
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Fed survey: Banks' business-loan standards unchanged in Q3
US banks changed standards little for business loans during the third quarter, according to a survey by the Federal Reserve. Banks left standards for residential mortgages and auto loans unchanged but tightened standards for commercial mortgages and credit cards, the survey finds.
Reuters (04 Nov.) 
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Stock falls after Uber reports bigger loss
Uber's revenue increased 30% in the third quarter, but its loss rose to $1.2 billion from $986 million in Q3 of 2018. Uber's stock dropped about 5% in after-market trading.
MarketWatch (05 Nov.),  Agence France-Presse (05 Nov.) 
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Brokers: MSCI might drop heavily indebted firms from India index
Heavily indebted Indian companies that have seen their market value drop sharply might be removed soon from the MSCI India Index, brokers say. MSCI is scheduled to announce results of a semiannual review of indexes Thursday.
BNN Bloomberg (Canada) (04 Nov.) 
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China's modest rate cut reverses government bond slump
The Chinese government bond market has stabilized and started strengthening after the central bank lowered the interest rate of one-year loans to banks by 5 basis points. The yield on the 10-year bond has declined the most since August.
BNN Bloomberg (Canada) (05 Nov.) 
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India rejects major Asian trade agreement
India says it won't join the Regional Comprehensive Economic Partnership, an Asian trade bloc that would have included 50% of the global population and 30% of GDP worldwide. Indian leaders are worried about harm to the economy if flooded by inexpensive products from China.
Agence France-Presse (04 Nov.) 
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Xerox to divest stake in Fujifilm joint venture
Xerox will sell to Fujifilm a 25% stake in joint venture Fuji Xerox for $2.3 billion. The move ends a dispute over a potential merger that would have given Fujifilm control over Xerox.
Reuters (05 Nov.) 
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Economics
China to open economy further, Xi says
China will continue to open the economy to the world, President Xi Jinping said at a trade exhibition in Shanghai. The world must "continue to knock down walls, instead of building walls, resolutely oppose protectionism and unilateralism, [and] continuously reduce trade barriers," he said.
Agence France-Presse (05 Nov.) 
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Geopolitical/Regulatory
SEC proposes update to RIA Advertising Rule
A proposal from the Securities and Exchange Commission to change the Advertising Rule for registered investment advisers would allow use of third-party ratings, testimonials and endorsements to attract business. The proposal has a 60-day comment period.
ThinkAdvisor (free registration) (04 Nov.) 
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High court accepts case challenging SEC disgorgement power
The US Supreme Court has agreed to hear a challenge to the Securities and Exchange Commission's authority to require disgorgement of profits made through fraud. The court will also examine whether the SEC can seek disgorgement from foreign entities.
Pensions & Investments (free access for SmartBrief readers) (04 Nov.) 
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EU clearinghouses brace for fight over proposal to toughen rules
EU derivatives clearinghouses are preparing to fight any move to increase the financial contribution they must make in the event of a downturn, saying it would endanger their solvency. "Smaller clearinghouses could be put out of business unnecessarily without any risk concern -- we think this could affect at least five out of the 16 clearinghouses in Europe," says Rafael Plata, secretary-general of the European Association of CCP Clearing Houses.
MLex (subscription required) (11 Nov.) 
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Financial Products
Newfound, ReSolve introduce momentum ETF
Newfound Research and ReSolve Asset Management have brought to Cboe Global Markets an exchange-traded fund that shifts exposure to different regions of the world based on momentum and changes to short- or intermediate-term US Treasurys when global stock markets deliver negative returns. The Strategy Shares Newfound/ReSolve Robust Momentum Index ETF tracks the Newfound/ReSolve Robust Equity Momentum Index.
ETF Trends (04 Nov.),  ETF (04 Nov.) 
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