Morning Bell

• Markets expecting Fed rate cut this week
  Analysts are expecting at least a quarter-point interest-rate cut when the Federal Reserve meets this week, and some peg the cut as high as a half point. Chairman Ben S. Bernanke and other Fed officials have signaled that a rate cut is forthcoming, even as the threat of higher inflation looms. TIME/Associated Press (12/9)

• Analysis: Rate cut may be ineffective: A BusinessWeek news analysis warns that this week's expected Federal Reserve interest-rate cut may not be enough to stimulate growth or help the economy avoid a recession. Bloomberg Businessweek (12/10)

• Profit slump raises recession fears: Lower U.S. corporate profits are raising concerns that the economy is headed toward a recession. An ongoing profit slump could lead to reduced capital spending and hiring. The profit slump is extending from banks and financial-services companies to other industries. The Wall Street Journal (tiered subscription model) (12/10)

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Industry News

• SIV rescue fund to go into "high gear" today
  BlackRock has been named adviser to the rescue fund aimed at bailing out structured investment vehicles. Syndication activity for the fund, which was formed by large banks with backing from the Treasury Department, is expected to go into high gear today. The Wall Street Journal (tiered subscription model) (12/8)

• Travelport mandates five banks for $2 billion flotation
  Travelport, which is owned by The Blackstone Group, has chosen UBS, Credit Suisse and Citigroup as joint global coordinators and Goldman Sachs and Deutsche Bank as joint bookrunners for its $2 billion initial public offering. The flotation could be the largest listing of a U.S. company in Britain by a private-equity group. Financial News Online (U.K.) (subscription required) (12/10)

• Editorial: Lack of global competitiveness is hidden crisis
  The subprime mess is overshadowing another problem for U.S. markets -- "the growing lack of global competitiveness," The Wall Street Journal says in an editorial. More companies are choosing to file initial public offerings outside of the U.S., and a report released last week shows foreign companies delisting from U.S. exchanges at a faster rate. The newspaper blames costly regulation and lawsuits as a cause for the trend. The Wall Street Journal (tiered subscription model) (12/10)

• China boosts amount foreigners can invest to $30 billion
  China's State Administration of Foreign Exchange has announced that the amount of money registered foreign investors would be allowed to invest in the mainland capital market would increase from $10 billion to $30 billion. The announcement comes on the eve of an economic summit between U.S. and Chinese policymakers. The Wall Street Journal (tiered subscription model)/Dow Jones Newswires (12/10)

• Other News

• Book charts Grasso's rise at New York Stock Exchange
  Los Angeles Times (12/9)

• Model-portfolio programs grow in anticipation of market
  InvestmentNews (free registration) (12/10)

Regulatory Roundup

• Consumer groups back expanding principal-trade rule
  The Fund Democracy and the Consumer Federation of America have come out in support of placing discretionary accounts and advisory firms affiliated with brokers under an expanded principal-trade rule. The temporary rule expires in 2010, but may end up being made permanent. InvestmentNews (free registration) (12/10)

• To avoid recession, Bernanke may be "fool in the shower"
  Federal Reserve Chairman Ben S. Bernanke is walking the fine line between assuring markets that the Fed is ready to ride to the rescue and the risk of raising inflation. The Fed is widely expected to lower its benchmark interest rate from 4.5% this week, and Bernanke may have to risk becoming the "fool in the shower" in an analogy attributed to the late Nobel Prize-winning economist Milton Friedman. "The Fed has to assure the markets that it's ready to ride to the rescue and cut rates by as much as necessary," said Lyle Gramley, a former Fed governor. Bloomberg (12/10)

Legislative Update

• Government looks into tax policy of exchange-traded notes
  A notice from the Treasury Department to Barclays Plc regarding exchange-traded notes linked to currency exchange rates is opening up a discussion about the different tax policies for the notes versus mutual funds. "Today, mutual funds and ETNs are taxed differently because they are fundamentally different products with different characteristics," SIFMA President and CEO Marc Lackritz said in a Nov. 5 letter to the House Ways and Means Committee. Lackritz said making owners of exchange-traded notes pay taxes would amount to taxing "phantom income" because all distributions are reinvested. Bloomberg (12/7)

• Other News

• Frank gets bills through House with help of GOP allies
  The Wall Street Journal (tiered subscription model)/Dow Jones Newswires (12/10)

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Hot Topics

Top five news stories selected by SIFMA SmartBrief readers in the past week.

• Moody's prepares biggest downgrade since subprime troubles began (Bloomberg)

• Battle over hedge fund manager's estate shows fast living (NYTimes.com)

• ABN Amro fights new parent over bonuses (Reuters)

• Fidelity recruits Citigroup's chief information officer (Financial News Online (U.K.))

• N.Y. State Retirement fund makes 500% return on investment (Financial News Online (U.K.))

• Results based on number of times each story was clicked by readers.

Investor Trends

• With credit crunch, municipal bonds become attractive option
  The credit crunch has made municipal bonds an attractive option for investors. The bonds typically offer lower yields because of their tax-exempt status, but credit-market woes have evened the gap. The Wall Street Journal (tiered subscription model) (12/8)

SmartQuote

Compassion is the basis of all morality." --Arnold Schopenhauer, German philosopher