White House gives up on proposal to cut drug costs | Minutes: ECB willing to cut rates, buy assets | Trump drops effort to add citizenship question to census
12 July 2019
CFA Institute: Financial NewsBrief
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Top Stories
Dow breaks 27,000 for first time; S&P 500 sets record
A volatile day on US equity markets ended with the Dow Jones Industrial Average above 27,000 for the first time and the S&P 500 setting another record high. The rally lost momentum after an auction of long-term Treasurys saw weak demand.
The Associated Press (12 Jul.),  MarketWatch (11 Jul.),  CNBC (11 Jul.) 
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White House gives up on proposal to cut drug costs
The Trump administration has dropped a plan to reduce the cost of prescription medicines by barring drugmakers from paying rebates to insurers and requiring them to pay patients instead. Instead, the White House has proposed reducing the cost of drugs in the US to more closely match the lower prices many countries pay.
Reuters (11 Jul.),  Politico (11 Jul.) 
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Minutes: ECB willing to cut rates, buy assets
The European Central Bank Governing Council is open to not only an interest-rate decrease but also asset purchases if necessary, meeting minutes show. "There was broad agreement that, in light of the heightened uncertainty, which was likely to extend further into the future, the Governing Council needed to be ready and prepared to ease the monetary policy stance further," the minutes show.
Reuters (11 Jul.),  Bloomberg (tiered subscription model) (11 Jul.),  Financial Times (subscription required) (11 Jul.) 
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Trump drops effort to add citizenship question to census
President Donald Trump has said he will no longer work on adding a question about citizenship to the 2020 US census. He has said he will order federal agencies to provide data on citizens and noncitizens to the Commerce Department.
The Associated Press (11 Jul.) 
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Market Activity
Chinese trade data boosts most Asian-Pacific markets
Most Asian-Pacific stock markets advanced Friday after China's June exports fell less than expected. Japan's Nikkei 225 moved up 0.2%; Hong Kong's Hang Seng Index added 0.2%; Australia's S&P/ASX 200 fell 0.3%; China's Shanghai Composite gained 0.4%; South Korea's Kospi rose 0.3%; and India's Sensex was down 0.2%.
CNBC/Reuters (12 Jul.),  The Economic Times (India) (18 Jul.) 
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Economics
EU presidential nominee backs push into green investment
European Commission presidential nominee Ursula von der Leyen has indicated support for changing the mandate of the European Investment Bank to a "climate bank" focused on green investment. "There's a huge opportunity in the economic development towards climate neutrality," she told the Liberal group in the European Parliament.
BNN Bloomberg (Canada) (12 Jul.) 
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US posts 23% increase in budget deficit
For the first nine months of the fiscal year, the US budget deficit rose $140 billion, a 23.1% increase from a year ago, the Treasury Department said. The Trump administration has said the US will end the fiscal year with a $1 trillion deficit.
The Associated Press (11 Jul.) 
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Geopolitical/Regulatory
SEC's Peirce: Promptly report any Reg BI compliance issues
Financial professionals who run into major problems complying with the Securities and Exchange Commission's Regulation Best Interest should promptly reach out to the agency for guidance, said SEC member Hester Peirce. "I'm much more willing to be an advocate for additional time if I see that people are actually taking this seriously and not waiting until the eleventh hour to get things done," she said.
InvestmentNews (tiered subscription model) (11 Jul.) 
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Trump: Firms with cryptocurrencies need bank charters
President Donald Trump says that he isn't a fan of cryptocurrencies and that companies that want to deal in them should face banking regulations. "If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International," he tweeted.
Reuters (11 Jul.) 
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Barr won't have role in Boeing 737 Max investigation
The US Justice Department says Attorney General William Barr has recused himself from an investigation of Boeing after two crashes involving the 737 Max because his former law firm represents Boeing.
BNN Bloomberg (Canada) (11 Jul.) 
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NatWest debuts free calculator to aid Libor switch
NatWest Markets has created a free online calculator for determining compounded rates for the Sterling Overnight Index Average to help market participants with the transition away from Libor. NatWest is taking industry comments for about one month to refine the calculator.
Practice Insight (11 Jul.) 
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N.Y.: US should get states' input on foreign-bank liquidity rules
The Federal Reserve shouldn't finalize liquidity requirements for US branches of foreign banks until it has heard from state regulators, the New York Department of Financial Services says. New York and some other states have procedures that guarantee deposits are repaid in a crisis, the department says.
MLex (subscription required) (11 Jul.) 
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Fed's Quarles expects Volcker rewrite by fall
Federal Reserve Vice Chairman for Supervision Randal Quarles says he expects a proposed rewrite of the Volcker rule to be ready by fall. Proposed easing of capital and liquidity requirements for smaller banks also should be ready by fall, Quarles says.
Reuters (11 Jul.),  Bloomberg (tiered subscription model) (11 Jul.) 
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BoE: Brexit preparedness has improved, but risks remain
UK banks hold sufficient capital to adjust to a no-deal Brexit, but companies could still face major disruption, according to a stability report from the Bank of England. "Although the degree of preparedness for such a scenario has improved, material risks still remain," Governor Mark Carney says.
Reuters (11 Jul.),  The Guardian (London) (11 Jul.),  Financial Times (subscription required) (11 Jul.),  Global Investor (subscription required) (11 Jul.) 
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Powell: G-7 officials likely to discuss Facebook's libra
Federal Reserve Chairman Jerome Powell has told US lawmakers he expects next week's Group of Seven meeting to include Facebook's cryptocurrency, libra, as a main topic of discussion.
Reuters (11 Jul.) 
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Financial Products
Aptus debuts ETF using options collar strategy
Aptus Capital Advisors has brought to Cboe Global Markets an exchange-traded fund that buys high-dividend large-cap stocks and that uses the options collar strategy to protect against major losses. The Aptus Collared Income Opportunity ETF holds about 30 stocks, as well as derivatives linked to securities such as the SPDR S&P 500 ETF Trust.
ETF (10 Jul.) 
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