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IMF's Western Hemisphere Regional Economic Outlook Shows Domestic Demand Leading Recovery in Many Latin American Countries; Risk of Overheating Must be Watched
October 19, 2010--Two years after the onslaught of the global financial crisis, some countries in the Western Hemisphere are growing at a pace that is second only to emerging Asia, according to the latest Regional Economic Outlook from the International Monetary Fund (IMF). Growth in many economies appears to be self-sustained and based on robust domestic demand, meaning their near-term prospects are positive even if recovery in advanced economies continues to be sluggish, says the IMF's Western Hemisphere: Heating up in the South, Cooler in the North, which was launched today in Bogotá in a seminar hosted by the Central Bank of Colombia.
Real GDP in the Latin America and Caribbean region is set to expand by 5.7 percent in 2010 and 4 percent in 2011. Within the region, countries are performing at different paces. Most commodity-exporting countries in South America enjoy very favorable external conditions––high international commodity prices and easy access to international finance ––and growth in some countries is projected to exceed 7 percent this year. Central American economies have kept a positive, but more moderate rate of growth (averaging about 3 percent in 2010), reflecting their greater linkages to the slower-growing U.S. economy. For most Caribbean countries, recovery is only beginning and prospects are still limited by high levels of public debt and weak tourism demand from the U.S. and other advanced economies.
"The marked heterogeneity across the region means varied challenges for economic policy formulation," Nicolas Eyzaguirre, Director of the IMF’s Western Hemisphere Department, said. "For most of South America, it is all about the risks of too much of a good thing, to avoid possible excesses of demand and finance. In Central America, governments have to continue to be prudent, to rebuild their defenses and continue pursuing reforms to boost competitiveness. Caribbean countries generally have no space for fiscal stimulus due to their high debts and still have to push ahead with fiscal consolidation plans."
Robust Domestic Demand
One of the most significant findings of the Regional Outlook is how domestic demand has been strengthening in the fastest-growing countries in South America. For such countries, the strength and momentum of domestic demand are likely to dominate their near-term growth prospects, provided advanced economies do not suffer any major setbacks. That is a different reality from the United States, where the recovery so far has been dependent on policy stimulus.
As commodity prices are expected to remain high, the commodity-exporting countries will benefit from strong export earnings. At the same time, those with stronger fundamentals and track records of sound policies will have ample access to foreign financing on easy terms. While those economies stand to benefit from low global interest rates and increased liquidity, policymakers must be alert to the risks of excesses. "Demand needs to moderate in these countries," said Mr. Eyzaguirre, "or they may risk experiencing overheating, inflation and widening current account deficits."
view Regional Economic Outlook: Western Hemisphere
Heating Up in the South, Cooler in the North report
Source: IMF
iShares files with the SEC
Octobe 19, 2010--iShares has filed a registration statement with the SEC for
iShares MSCI Russia Capped Index Fund.
view filing
Source: SEC.gov
Report to the Congress on Risk Retention
October 19, 2010--The Federal Reserve Board on Tuesday issued a report on the potential impact of credit risk retention requirements on securitization markets. The report was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act also requires the Federal Reserve and other agencies to jointly implement risk retention requirements for securitizers or originators of assets securitized through the issuance of asset-backed securities.
The report highlights the significant differences in market practices and performance across securitizations backed by different types of assets. The report recommends that the agencies take these differences into account when developing risk retention requirements in order to achieve the objectives of the Dodd-Frank Act without unnecessarily impeding the availability of credit.
View the Report to the Congress on Risk Retention
October 2010
Source: Board of Governors of The Board the Federal Reserve System
Standard & Poor's Announces Changes in the S&P/TSX Venture Composite Index
October 19, 2010-- Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Tuesday, October 19, 2010:
DeeThree Exploration Ltd. (TSXVN:DTX) will be removed from the index. The company will graduate to trade on TSX under the same ticker symbol.
San Gold Corporation (TSXVN:SGR) will be removed from the index. The company will graduate to trade on TSX under the same ticker symbol.
Medoro Resources Ltd. (TSXVN:MRS) will be removed from the index. The company will graduate to trade on TSX under the same ticker symbol.
Terrane Metals Corp. (TSXV:TRX) will be removed from the index. The shares of the company have been acquired by Thompson Creek Metals Company Inc. (TSX:TCM) through a Plan of Arrangement.
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Source: Standard & Poors
CFTC to Hold Open Meeting on Third Series of Proposed Rules under the Dodd-Frank Act
CFTC also to Consider One Non Dodd-Frank Proposed Rule
October 19, 2010--The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Tuesday, October 26, 2010, at 9:30 a.m. to consider the issuance of the following proposed rulemakings under the Dodd-Frank Wall Street Reform and Consumer Protection Act:
Prohibition of market manipulation and disruptive trading practices;
Provisions common to registered entities;
Removing any reference to or reliance on credit ratings in Commission regulations and proposing alternatives; and
Process of review of swaps for mandatory clearing.
In addition to the above proposed rulemakings, the Commission will consider one Non Dodd-Frank proposed rule – Investment of customer funds and funds held in an account for foreign futures and foreign options transactions.
read more
Source: CFTC.gov
Merrill survey highlights return to risk
October 19, 2010--Fund managers are flocking into risky assets as confidence rises ahead of an expected second round of quantitative easing from the Federal Reserve, according to a new survey.
The Bank of America-Merill Lynch Fund Manager Survey questions 194 fund managers, with portfolios totalling $492bn in assets, and is seen as a barometer of sentiment in the financial markets. October saw the level of risk jump by the largest margin since April 2009.
Recalibrated portfolios are showing a strong move into equities, particularly in emerging markets, as confidence in Chinese growth rises. A net 19 per cent of managers expect China’s economy to strengthen over the next year, up from a net 11 per cent in September.
read more
Source: FT.com
Concurring Statement Relating to the Commission’s Proposal on Position Reports for Physical Commodity Swaps and Swaptions
Commissioner Jill E. Sommers
October 19, 2010-- support this proposal to receive daily position reports for physical commodity swaps and swaptions because I believe it furthers our continued effort to expand transparency into swap markets and because I believe it is critical that the Commission receive this information as soon as possible. I recognize that this proposal is a precursor to the Commission moving forward with a proposal on the imposition of position limits. That said, my vote in support of this proposal today should not in any way be interpreted as expressing support for moving forward with the imposition of position limits by the deadlines set forth in Dodd-Frank.
In July and August 2009, the Commission held three public hearings to discuss imposition of position limits in energy markets. Five months later, in January 2010, the Commission issued a proposed rule imposing position limits in four enumerated energy contracts. I had grave concerns about moving forward with position limits on those four contracts, and accordingly voted against the proposal. My grave concerns about moving forward with position limits have not been eased, and in fact, have only been heighted by certain provisions of Dodd-Frank.
Section 737 of Dodd-Frank states that the Commission shall by rule, regulation, or order establish limits on the amount of positions, as appropriate, that may be held by any person. This section requires the limits to be aggregated across markets and related products and to be imposed within 180 days for energy and metals contracts, and 270 days for agricultural contracts.
read more
Source: CFTC.gov
Opening Statement, Second Series Of Proposed Rulemakings Under The Dodd-Frank Act
Commissioner Scott O’Malia
October 19, 2010--Mr. Chairman, I would like to thank the teams who have spent many long hours developing the rules we will consider here today. The staff has actively sought input from the Commissioners and worked cooperatively to make improvements to each of these rulemakings.
I would like to commend Don Heitman and his team in developing a thoughtful and well constructed rule making on agricultural swaps. The rulemaking is balanced and the questions are straightforward.
I would also like to extend my thanks to Carl Kennedy and his team for their work on the Fair Credit Reform Act and consumer protections provided for under Gramm-Leach-Bliley Act. Protecting sensitive and personal information is always of paramount importance.
With regard to the Large Trader Reporting proposal, I continue to have concerns with the reporting methodology being developed by the Commission. I do appreciate all the hard work and research Bruce Fekrat and his team have undertaken in drafting this rulemaking.
read more
Source: CFTC.gov
Wisdom Tree files with the SEC
October 19, 2010-Wisdom Tree has filed a post effective amendment, registration statement with the SEC for 3 actively managed ETFs.
The Asia Bond Fund
Latin America Bond Fund
EMEA Bond Fund.
view filing
Source: SEC.gov
Dow Jones Indexes Launches LATixx Peru Government Nuevos Soles Bond and Global Peru Government USD Bond Indexes
October 18, 2010-- Dow Jones Indexes, a leading global index provider, LVA Indices (LVA), the leading fixed income index and pricing provider in Chile, and Proveedor Integral de Precios (PIP), a leading index and pricing provider in Latin America, today announced the launch of the Dow Jones LATixx Peru Government Nuevos Soles Bond and the Dow Jones LATixx Global Peru Government USD Bond Indexes. These indexes are designed to measure the performance of the Peruvian Government's local and global issues in Nuevos Soles and US Dollars.
The Dow Jones LATixx Indexes are designed to serve as basis for investment products such as exchange-traded funds, structured products, futures and options.
"These indexes provide investors with an opportunity to measure the bond market in the emerging nation of Peru," said Michael A. Petronella, president, Dow Jones Indexes. "This is the first index in the LATixx family of indexes which measures Peru, specifically. We expect to expand this family of indexes to cover all of the major Latin American markets," noted Petronella.
"These indexes will help to develop more sophisticated products in the local market as well as contribute to promoting the Peruvian market abroad, which in the last years has also been performing very well," said Manuel A. González, director of international administration, CEO, LVA Indices, Proveedor Integral de Precios.
"We believe these indexes will prove to be a significant contribution for local investment managers by providing them with an adequate benchmark to measure and analyze the performance of their portfolios," said Gregorio Gonzalez,
The Dow Jones LATixx Peru Government Nuevos Soles Bond and the Dow Jones LATixx Global Peru Government USD Bond Indexes are market-cap weighted. Weights are rebalanced monthly. The Dow Jones LATixx Peru Government Nuevos Soles Bond Index is calculated in Nuevos Soles and the Dow Jones LATixx Global Peru Government USD Bond Index is calculated in U.S. dollars.
Back-tested historical data is available back to January 1, 2009, with the base date of December 31, 2008 and an initial value set to 1000.0.
As of September 30, 2010, the Dow Jones LATixx Peru Government Nuevos Soles Bond Index had a year-to-date performance of 3.49%.
As of September 30, 2010, the Dow Jones LATixx Global Peru Government USD Bond Index had a year-to-date performance of 16.62%.
For more information on the Dow Jones LATixx Indexes, please visit www.djindexes.com.
1The Dow Jones LATixx Peru Government Nuevos Soles Bond Index and the Dow Jones LATixx Global Peru Government USD Bond Index were first published on October 18, 2010. All estimated daily historical closing prices prior to that date are based on back-testing (i.e., calculations of how the index might have performed in the past if it had existed). Back-tested performance information is purely hypothetical and is solely for informational purposes. Back-tested performance does not represent actual performance, and past performance is not indicative of future results.
Source: Dow Jones Indexes