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Fundamentals: King of the Mountain
September 13, 2011--Most of us remember playing "king of the mountain" as children. The goal, often accompanied by a certain measure of roughhousing,
was to summit a little hill and stay
at the top while others vied to push
us off and take our place.
King of the Mountain is not
merely a child’s game. The U.S.
stock market has been straddling a
surprisingly precarious “mountain”
in asset valuation for nearly two
decades, resisting efforts to push
us back below historical norms of
valuation levels except for brief
periods in 2002 and 2009.
We’ve written about the challenges over the past two years. In 2009, we described the coming “3-D Hurricane’s” soaring deficits and debts, in which we expect the post-baby-boom generations to pay down debts that we (1) promised to ourselves, (2) failed to prefund, and (3) failed to consult the generations that will be expected to honor these debts. In 2010, we addressed the consequence of soaring debt burdens in most of the developed world, as compared with the generally well-managed debt burdens of our primary external creditors in the developing world.
DTCC Announces Initiative To Revamp Processing of Continuous Net Settlement Obligations
White paper says changes will reduce risk and boost liquidity efficiencies for the industry
September 13, 2011 –The Depository Trust & Clearing Corporation (DTCC) has proposed changing the way its clearing agency subsidiaries, The Depository Trust Company (DTC) and National Securities Clearing Corporation (NSCC), process Continuous Net Settlement (CNS) transactions.
The enhanced process would align CNS processing into the risk management control structure used by DTC to reduce risk and boost liquidity efficiencies in the settlement of almost $870 billion in equities that trade in the U.S. markets each day.
The proposal is presented in a white paper – CNS Settlement as Delivery Versus Payment in DTC (CNS for Value) – issued to the industry today. In the paper, DTCC asks for feedback on the initiative. NSCC and DTC together clear and settle virtually all broker-to-broker equity, corporate and municipal debt securities transactions in the U.S. In addition, NSCC serves as the equity markets’ central counterparty and guarantees trades by becoming the buyer for every seller and the seller for every buyer for CNS-eligible securities.
Under the methodology currently used for CNS obligations, the securities are moved via a book-entry transfer that is free of payment at DTC with the related money settlement occurring at NSCC.
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
September 13, 2011--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Wednesday, September 14, 2011:
Valeura Energy Inc. (TSXVN:VLE) will be removed from the index as well as the S&P/TSX Venture Select Index.
The company will graduate to trade on TSX under the same ticker symbol.
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.
Cambria Investment Management, Inc. files with the SEC
September 12, 2011--Cambria Investment Management, Inc. has filed an application for exemptive relief with the SEC.
view filing
Transparent Value Advisors, LLC files with the SEC
September 12, 2011--Transparent Value Advisors, LLC and ALPS Distributors Inc., have filed for exemptive relief with the SEC for actively-managed ETFs.
view filing
Morgan Stanley-US ETF Weekly Update
September 12, 2011--Weekly Flows: $1.7 Billion Net Inflows
ETF Assets Stand at $1.0 Trillion, up 1% YTD
Launches: 4 New ETFs
Rydex Changes Russian Ruble ETF Ticker
US-Listed ETFs: Estimated Flows by Market Segment
For the fourth consecutive week, ETFs posted net inflows ($11.4 bln over the past 4 weeks)
ETFs posted net inflows of $1.7 bln last week, primarily driven by Fixed Income & Commodity ETFs
ETF assets stand at $1.0 tln, up 1% YTD; Fixed Income market share is at 17% versus 14% at year-end 2010
13-week flows were mixed among asset classes; combined $21.0 bln net inflows
Fixed Income ETFs up $9.0 bln; US Sector & Industry ETFs down $4.4 bln
We estimate ETFs have generated net inflows 22 out of 36 weeks in 2011; net inflows are up 39% YOY
US-Listed ETFs: Estimated Largest Flows by Individual ETF
Health Care Select Sector SDPR (XLV) generated net inflows of $755 mln, the most of any ETF
ETFs that exhibit more defensive qualities posted some of the largest net inflows last week (health care,
precious metals, Treasuries)
Conversely, the SPDR S&P 500 ETF (SPY) snapped a 3-week winning streak last week posting net outflows
of $1.4 bln
8 out of the 10 ETFs to exhibit the largest net outflows last week were US equity based
US-Listed ETFs: Change in Short Interest
Data Unchanged: Based on data as of 8/15/11
SPY exhibited the largest increase in USD short interest since last updated
$23.5 billion in additional short interest
Highest level of shares short for SPY of all time
XLU exhibited the largest decline in USD short interest since last updated
$237 million in reduced short interest
XLU’s decline in shares short comes amid its relative market outperformance vs. the S&P 500 over 7/29-8/15 time period
IndexIQ files with the SEC
September 12, 2011--IndexIQ has filed a Post-Effective Amendment No. 20, registration with the SEC.
view filing
IndexIQ files with the SEC
September 12, 2011--Index IQ has filed a post-effective amendment,registration statement with the SEC.
view filing
CFTC.gov Financial Data for Futures Commission Merchants Update
September 12, 2011--Selected FCM financial data as of July 31, 2011 (from reports filed by August 31, 2011) is now available.
view updates
State Street files with the SEC
September 12, 2011--SSgA Active ETF Trust has filed a pre-effective amendment, registration statement with the SEC for the SPDR SSgA Real Assets ETF
SPDR SSgA Income Allocation ETF
SPDR SSgA Conservative Allocation ETF
SPDR SSgA Global Allocation ETF
SPDR SSgA Aggressive Allocation ETF
SPDR Blackstone/GSO Senior Loan ETF
CME Group Sets Records for OTC Clearing Volumes, Expands OTC Product Offering for Open Clearing Solution
September 12, 2011-- CME Group, the world's leading and most diverse derivatives marketplace, today announced it set new daily and monthly records for clearing both interest rate swaps (IRS) and credit default swaps (CDS).
CME Group cleared daily customer volume records of $827 million of IRS on September 9, and over $1 billion of CDS on September 8.
Additionally, CME Group has set monthly records for volume cleared in September. The company has cleared over $1.5 billion in interest rate swap customer volume in September to date, exceeding the previous record monthly total of $1.2 billion in August. The company also has cleared $2.4 billion in credit default swaps customer volume in September to date, surpassing the previous record monthly total of $287 million in August.
McGraw-Hill Announces Comprehensive Growth and Value Plan to Increase Shareholder Value
To Separate Into Two Industry-Leading Public Companies, One Focused On Key Global Markets and the Other On Education
Enables Company to Streamline Operations and Reduce Costs
Will Accelerate Share Repurchases to $1 Billion in 2011
September 12, 2011--The McGraw-Hill Companies (NYSE: MHP) today announced that its Board of Directors has unanimously approved a comprehensive Growth and Value Plan that includes separation into two strong public companies: McGraw-Hill Markets, primarily focused on capital and commodities markets, and McGraw-Hill Education, focused on education services and digital learning.
The three-part Plan is designed to accelerate growth and increase shareholder value by:
1. Creating two "pure-play" companies with the scale, and the capital and cost structures to fully leverage their world-class franchises, iconic brands, and leading market positions
2. Reducing costs significantly to ensure efficient operating structures for the two new companies
3. Accelerating the pace of share repurchases to a total of $1 billion for the full year 2011 (approximately $540 million repurchased year to date)
The Growth and Value Plan will create two focused operating companies with deeper customer engagement, right-sized cost structures, and increased management focus and accountability. The creation of two companies with tailored capital structures and financial policies will also enhance strategic and financial flexibility and establish two attractive equity currencies.
CFTC.gov Financial Data for Futures Commission Merchants Update
September 12, 2011--Selected FCM financial data as of July 31, 2011 (from reports filed by August 31, 2011) is now available.
view updates
Volcker Rule Delay Is Likely
September 12, 2011--U.S. financial regulators are likely to miss an October deadline for the Volcker rule, a hotly contested part of last year's financial-overhaul law that limits financial firms from trading with their own money.
According to the Dodd-Frank law, regulators have until Oct. 18 to "adopt rules to carry out" the provision. But regulators haven't agreed yet on even a draft proposal of the rule, which is named for former Federal Reserve Chairman Paul Volcker, who first proposed the trading curbs.
NYSE Euronext welcomes German Federal Financial Supervisory Authority (BaFin) approval of merger of Deutsche Börse and NYSE Euronext
September 12, 2011-- NYSE Euronext today issued the following comment regarding the news that Germany’s Federal Financial Supervisory Authority (BaFin) has approved the merger of Deutsche Börse and NYSE Euronext.
“NYSE Euronext welcomes the approval by the German Federal Financial Supervisory Authority (BaFin) for our industry transforming merger. With this approval, we have cleared another significant regulatory hurdle as we continue to make progress on completing the transaction by the end of the year.”
Completion of the transaction is subject to other relevant competition and financial, securities and other regulatory authorities in the U.S. and Europe.
