| Global News Coverage for Investment Professionals |  |
- China hints at willingness to let yuan float
A change in language in the People's Bank of China's third-quarter report on monetary policy suggests the central bank considered allowing the yuan to float freely. The report, released ahead of U.S. President Barack Obama's visit to Beijing, does not employ the usual language about the yuan's peg to the dollar. Ding Zhijie, a professor at the University of International Business and Economics in Beijing, said this means the yuan will get stronger. "The exchange-rate policy in the last year can be viewed as an extraordinary policy for an extraordinary time," he said. "Now, it is time to bring closure to it." The Times (London) (subscription required)
(11 Nov.), MarketWatch
(11 Nov.)
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Asia, Russia try to boost dollar by buying currency: Central banks have stepped up purchases of U.S. dollars to drive up the value of the currency and blunt the impact of a weak dollar on recovery in their own countries. The Philippines, Russia, South Korea and Thailand made major purchases to slow the increase of their currencies. "Quite clearly, all Asian central banks have found it necessary to intervene, and it's costing us," said Korn Chatikavanij, Thailand's finance minister. The Wall Street Journal (tiered subscription model)
(12 Nov.)
- AIG's Benmosche says he's "totally committed" to company
American International Group CEO Robert Benmosche denied rumors that he plans to leave the company. In an open letter to employees, he said he is "totally committed to leading AIG through its challenges." Benmosche said the biggest challenge is to work out a compensation plan for employees. Any such plan would be scrutinized by White House pay czar Kenneth Feinberg. NYTimes.com
(11 Nov.)
- Fannie Mae, Freddie Mac say more losses are possible
The U.S. Treasury has injected $112 billion into Fannie Mae and Freddie Mac since the government took over last year, but the companies said it could have been more. Fannie and Freddie collected billions on claims from mortgage-insurance companies, but those companies are struggling with deteriorating conditions. A filing with the Securities and Exchange Commission shows Fannie set aside $1 billion, while Freddie has not set aside anything to cover the possibility that the insurance firms will not be able to pay. The Wall Street Journal (tiered subscription model)
(12 Nov.)
- PwC says governments could take years to sell bank stakes
PricewaterhouseCoopers said it is a long shot that governments will be able to quickly sell their stakes in financial institutions rescued during the financial crisis and instead might take as many as seven years to exit. "It could easily take two to three years to sell major stakes, but up to five to seven years before governments are able to fully divest of their stakes and related guarantees," said Jon Sibson, a partner at PwC. Reuters
(12 Nov.)
- 3Com accepts $2.7 billion takeover offer from HP
In a move that could heat up competition in the computer-networking business, 3Com accepted Hewlett-Packard's $2.7 billion all-cash buyout offer. Merging the companies would give HP a much strong position in networking, an area dominated by Cisco Systems. HP made it clear that is exactly what it has in mind. "HP is eager and now positioned to disrupt the networking industry," said Ann Livermore, an executive vice president at the company. Bloomberg Businessweek
(11 Nov.), NYTimes.com
(11 Nov.)
- Motorola considers splitting into 3 firms, sources say
Needing to pay down debt and raise cash, Motorola might divide into three companies instead of two, sources said. Goldman Sachs, JPMorgan Chase and Centerview Partners are looking for buyers for the Motorola unit that makes radios for cell phone towers and set-top boxes for cable-television suppliers, the sources said. They said the proposed sale is in a preliminary stage, and there is no assurance it will be completed. NYTimes.com
(11 Nov.)
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- Asian markets fall on economic concerns
Asian-Pacific markets mostly dropped Thursday as traders worried about the economy. Japan's Nikkei 225 fell 0.7%, Australia's S&P/ASX 200 slipped 0.2% and South Korea's Kospi Composite lost 1.4%. Hong Kong's Hang Seng Index decreased 1%, Taiwan's Taiex closed flat and China's Shanghai Composite inched down 0.1%. Meanwhile, New Zealand's NZX 50 gained 0.3%. The Wall Street Journal (tiered subscription model)
(12 Nov.)
- Markets disregard Geithner's latest promise of "strong dollar"
Financial markets discounted as political theater U.S. Treasury Secretary Timothy Geithner's latest assurance that the U.S. will "maintain a strong dollar." Traders are well aware that the Obama administration needs a weak dollar to help the U.S. recover, by making exports cheaper for foreign buyers and imports more expensive for domestic consumers. When Geithner talks about a strong dollar, he is merely assuring markets that the currency's decline will be gradual and orderly, said Dan Katzive, a currency strategist at Credit Suisse. Los Angeles Times
(12 Nov.)
- Retail investors pour record amount into muni mutual funds
The Investment Company Institute released data showing that investors put $55 billion this year into municipal bond mutual funds to take advantage of record returns. For the first nine months of this year, returns on state and local municipal bonds reached 16%, the best in 20 years, according to the Merrill Lynch Municipal Master Index. Retail investors poured more than $2 billion per week into muni mutual funds in August and September. Bloomberg
(12 Nov.)
- China to continue looser monetary policy despite growth
The People's Bank of China said in its third-quarter report that it intends to continue its moderately loose monetary policy and economic stimulus, despite the fact that the economy is growing fast. "We will make the policy more flexible and sustainable and keep policy abreast with economic climate and price changes," the central bank said. Chinese banks have lent a record $1.31 trillion this year, much more than the central bank's lending guidelines suggest, according to the report. China Daily (Beijing)/Xinhua News Agency
(12 Nov.)
- U.K. unemployment sees smallest increase since 2008
The unemployment rate in the U.K. rose to 7.8% in the third quarter, with job seekers increasing an unexpectedly small number, the Office for National Statistics said. Those jobless increased 30,000 to 2.46 million, the smallest gain since May 2008. Many without work are turning to part-time or temporary jobs, the agency said. The Guardian (London)
(11 Nov.)
- U.S. foreclosure filings slip 3% from September to October
October saw 332,292 U.S. homes seized by lenders or listed in default or auction documents, data provider RealtyTrac said. It was the eighth consecutive month that the number was more than 300,000, but there was a 3% decline from September. "The fundamental forces driving foreclosure activity in this housing downturn -- high-risk mortgages, negative equity and unemployment -- continue to loom over any nascent recovery," said James Saccacio, RealtyTrac's CEO. "We continued to see foreclosure activity levels that are substantially higher than a year ago in most states." Bloomberg
(12 Nov.)
| Geopolitical/Regulatory |  |  |
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- Firms try to prevent reinstatement of Glass-Steagall Act
Former U.S. President Bill Clinton repealed the Glass-Steagall Act, which split investment-banking activities from retail-banking operations, a decade ago. Congress is considering reinstating the measure, and financial firms are scrambling to prevent the change. "We're playing with live ammo," said Sam Geduldig, a lobbyist at Clark Lytle & Geduldig who represents financial-services companies. "The banking community is rightfully concerned." Bloomberg
(12 Nov.)
- Fed's activist response to crisis prompts political fallout
The Federal Reserve has long held its independence as key to its ability to focus on its mandate and guide the economy. Political fallout from the Fed's role in and response to the finance crisis will make it difficult for the central bank to do its job, former Fed officials said. U.S. Sen. Christopher Dodd said his proposal to overhaul financial regulation would help the Fed focus on interest rate and monetary-policy decisions by removing its responsibility to oversee banks. The Obama administration disagrees. The contrasting views could hinder approval of legislation to revamp financial regulation. The Washington Post
(12 Nov.)
- ECB member says some financial innovation should be banned
Marko Kranjec, a member of the European Central Bank's Governing Council, said financial innovation with no ties to the real economy should either be banned or strictly regulated. "Financial innovations without even a distant relation to the real sector do not serve the purpose of risk distribution and should be prohibited and/or heavily regulated," said Kranjec, head of the Slovenian central bank. ForexYard/Reuters
(12 Nov.)
- Switzerland links top bankers' pay to risk
The Swiss Financial Market Supervisory Authority adopted a measure to limit bankers' pay at the largest financial institutions. A large part of top executives' pay will be held back for three years, and compensation will be linked to risk. But no limit was imposed on bonuses. The measure goes into effect Jan. 1. NYTimes.com
(11 Nov.)
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- Fed in talks with banks regarding CoCo bonds
The Federal Reserve is in discussions with U.S. banks regarding the use of a hybrid security, known as a contingent convertible. The security acts as a bond when a bank is profitable and pays coupon interest to investors. But when a bank is in trouble, the security converts into equity, allowing the bank more leeway on its balance sheet. William Dudley, president of the Federal Reserve Bank of New York, said such instruments are promising. "If these contingent capital buffers were large ... then the worst aspects of the banking crisis might have been averted," Dudley said. Financial Times (tiered subscription model)
(11 Nov.)
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