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Fundamentals: The Biggest Urban Legend in Finance
March 30, 2011--Stocks ought to produce higher returns than bonds for the capital markets to "work." But stocks have not always produced the 4-5% equity risk premium that many investors expect over long time periods. In fact, if we delve into history, there are long periods where U.S. stocks underperform government bonds. A caution to the wise: A lower forward-looking equity risk premium—and its implicit reduction for stock allocations—might be well-advised.
Ibbotson Associates, whose annual data compendium1 covers U.S. stocks and U.S. bonds since January 1926, shows the S&P 500 Index compounding through
December 2010 at an annual rate of 9.9% vs. 5.5% for long-term government bonds, an excess return of 4.4%. This return compounds exponentially with time. A $1,000 U.S. stock investment in 1926 would have ballooned to $3 million
by December 2010 vs. $92,000 for
an investment in long-term bonds,
a 32-fold difference.
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Source: Research Affiliates
Deutsche Bank and Invesco PowerShares Launch First Exchange Traded Notes Linked to Foreign Sovereign Bond Futures
March 30, 2011--Deutsche Bank and Invesco PowerShares Capital Management, LLC today announced the launch of six Exchange Traded Notes (ETNs) linked to the foreign sovereign bond futures. These will be the first ETNs to provide investors with leveraged or unleveraged exposure to the U.S. dollar value of the returns of German sovereign bond futures, Italian sovereign bond futures and Japanese sovereign bond futures. These ETNs expand upon Deutsche Bank’s product line-up that already includes leveraged ETNs linked to US Ultra T-Bond Futures.
The ETNs will be listed for trading on the NYSE Arca, under the following symbols:
PowerShares DB German Bund Futures ETN:(NYSE Arca: BUNL)
PowerShares DB 3x German Bund Futures ETN: (NYSE Arca: BUNT)
PowerShares DB Italian Treasury Bond Futures ETN: (NYSE Arca: ITLY)
PowerShares DB 3x Italian Treasury Bond Futures ETN: (NYSE Arca: ITLT)
PowerShares DB Japanese Govt Bond Futures ETN: (NYSE Arca: JGBL)
PowerShares DB 3x Japanese Govt Bond Futures ETN: (NYSE Arca: JGBT)
The ETNs are senior unsecured obligations issued by Deutsche Bank AG, London Branch. The returns of each ETN are obtained by combining the month-over-month performance or three times the month-over-month performance of the DB USD Bund Futures Index, the DB USD BTP Futures Index or the DB USD JGB Futures Index, as applicable, with the monthly returns of the DB 3-Month T-Bill Index, less an investor fee.
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Source: Deutsche Bank
Bloomberg Facilitates Execution & Clearing of CDS & IRS E-Trades
J.P. Morgan executes trades with multiple firms on FIT Platform
March 30, 2011--Bloomberg executives today announced that J.P. Morgan electronically executed and cleared credit default swap (CDS) and interest-rate swap (IRS) trades on Bloomberg's Fixed Income Electronic Trading platform (FIT).
The trades demonstrate that Bloomberg's Fixed Income business is preparing to meet the broadly defined requirements of the Dodd-Frank Act, which calls for increased transparency and market efficiency in over-the-counter (OTC) derivatives trading. Bloomberg intends to register with the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) as a Swap Execution Facility (SEF) and Security Based Swap Execution Facility (SBSEF), respectively.
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Source: Bloomberg
"Whistling"
Remarks of Commissioner Bart Chilton to Taxpayers Against Fraud (TAF), New York, New York
March 30, 2011--Introduction
It is good to be with all of you this afternoon. I appreciate that we are able to join together through the magic of technology. I know many of you aren't located in the cities where most of our financial regulatory work occurs: Washington, New York and Chicago. That makes it all the more refreshing to be able to talk with folks in many parts of the country. That is, in addition to those of you in the cities I named.
When I hear about groups doing good work, whose mission it is to work every day for a noble cause, I get a little Pollyannaish myself. That is, I want to look for the good and positive things that can be done. I know you all strive to do good work and I commend you for it, not that you need to hear it from a government regulator. We do, however, share some common goals. I like to think that people in government are in that group seeking good, although on the whole, we don't hit the mark as often as we should.
Regulatory Challenges
Today, I want to focus on just one issue. To be candid, it is a pleasure to talk about a single issue. We have over 40 rulemakings going on at the CFTC. Our brethren regulator, the Securities and Exchange Commission, has many more. We've all been very busy trying to come up to speed on issues, review and publish proposals, consider comments, and then if we feel comfortable—like we got it right—go final on rules and regulations. Talking about the logistics of the process is easy, however. Moving through it is another matter.
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Source: CFTC.gov
Alexion Pharmaceuticals, Inc. to Join the NASDAQ-100 Index Beginning April 4, 2011
March 29, 2011--Alexion Pharmaceuticals, Inc. (Nasdaq:ALXN) will become a component of the NASDAQ-100 Index® (Nasdaq:NDX), the NASDAQ-100 Equal Weighted Index (Nasdaq:NDXE) and the NASDAQ-100 Ex-Tech Sector Index (Nasdaq:NDXX) prior to market open on Monday, April 4, 2011.
Alexion Pharmaceuticals, Inc. will replace Genzyme Corporation (Nasdaq:GENZ).
Source: NASDAQ OMX
Component Changes Made To Dow Jones Telecommunications Titans 30 Index
March 29, 2011--Dow Jones Indexes, a leading global index provider, today announced that Qwest Communications International Inc. (United States, Telecommunications, Q) will be removed from the Dow Jones Telecommunications Titans 30 Index.
Qwest Communications International Inc. (United States, Telecommunications, Q) will be replaced by CenturyLink Inc. (United States, Telecommunications, CTL) in the Dow Jones Telecommunications Titans 30 Index due to its acquisition by CenturyLink Inc.
The changes in the Dow Jones Telecommunications Titans 30 Index will be effective as of the open of trading on Friday, April 1, 2011.
Further information on the Dow Jones Telecommunications Titans 30 Index can be found on www.djindexes.com.
Source: Dow Jones Indexes
BATS takes on New York with new platform
March 29, 2011--BATS Global Markets, operator of the third-largest US stock exchange, has confirmed it will launch a market for primary listings in the fourth quarter, opening a new front in its challenge to the dominance of the New York Stock Exchange and Nasdaq.
The company said it had submitted draft rules to the Securities and Exchange Commission, the US regulator, and expected to make a formal filing and public comment shortly.
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Source: FT.com
Bats Global Markets to Launch U.S. Primary Listings Business in Q4
Technology, Pricing, Issuer Support Will Be Key Differentiators
March 29, 2011--BATS Global Markets (BATS), a global operator of securities and derivatives markets, today confirmed its plans to launch a primary listings market in the U.S. in the fourth quarter of 2011.
The company has submitted draft rules to the SEC and anticipates formally filing them for notice and public comment shortly. The new listings venue will create a competitive alternative to the incumbent exchanges which offer listings services for companies considering the IPO process.
“We believe there is a need for an alternative listing venue in today’s market, which has only been heightened in recent weeks as legacy exchanges weigh different merger and acquisition strategies,” said Joe Ratterman, president and chief executive of BATS Global Markets.
“In addition, market conditions have become increasingly favorable to companies looking to gain access to the capital markets so we’re excited to launch our listings business later this year,” he said.
The listings program will reflect the BATS philosophy with:
•Simple and competitive pricing
•Innovative tools and technology
•Leading customer support and education
BATS will release additional information about BATS Listings in the coming months. Companies that are interested in learning more should contact BATS at listings@batstrading.com.
Source: BATS
CFTC Cancels Open Meeting Scheduled for March 30, 2011
March 29, 2011-- The Commodity Futures Trading Commission has cancelled its open meeting on Thirteenth Series of Proposed Rules under the Dodd-Frank Act scheduled for Wednesday, March 30, 2011.
Last Updated: March 29, 2011
Source: CFTC.gov
ALPS files with the SEC
March 29, 2011--ALPS has filed an application for exemptive relief with the SEC for actively-managed ETFs.
view filing
Source: SEC.gov
