Global ETF News Older than One Year
Accounting Devices and Fiscal Illusions
March 28, 2012--EXECUTIVE SUMMARY
A government seeking to reduce its deficit can be tempted to replace genuine spending cuts or tax increases with accounting devices that give the illusion of change without its
substance, or that make the change appear larger than it actually is.
Under ideal accounting standards, this would not be possible, but in real accounting it sometimes is. For example, governments can sometimes sell assets or borrow money and count the proceeds as revenue, or defer unavoidable spending without recognizing a liability. In each case, this year’s reported deficit is reduced, but only at the expense of future deficits. The result is that the reported deficit loses some of its accuracy as a fiscal indicator.
The use of accounting stratagems cannot be eliminated, but several things can be done to reduce their use or at least bring them quickly to light. Governments can be encouraged to prepare audited financial statements—income statement, cash-flow statement, and balance sheet—according to international accounting standards, and statisticians, who in many countries use accounting data to compile the most important (“headline”) fiscal indicators, can be given the resources and independence to be both expert and impartial, as well as the authority to revise standards in the light of emerging problems. To help reveal remaining problems in headline fiscal indicators, a variety of alternative fiscal indicators can be monitored, since a problem suppressed in one fiscal indicator is likely to show up in another. Many of the devices documented in this note would be revealed if governments also reported change in net worth and high-quality long-term forecasts of the headline indicator of the deficit under current policy.
view the IMF Report-Accounting Devices and Fiscal Illusions
Source: IMF
IMF paper-Revisiting Risk-Weighted Assets
March 28, 2012--Summary: In this paper, we provide an overview of the concerns surrounding the variations in the calculation of risk-weighted assets (RWAs) across banks and jurisdictions and how this might undermine the Basel III capital adequacy framework.
We discuss the key drivers behind the differences in these calculations, drawing upon a sample of systemically important banks from Europe, North America, and Asia Pacific. We then discuss a range of policy options that could be explored to fix the actual and perceived problems with RWAs, and improve the use of risk-sensitive capital ratios.
view the IMF paper-IMF paper-Revisiting Risk-Weighted Assets
Source: IMF
Brics to eye joint bank, exchange ties
March 28, 2012--The Brics group of emerging world powerhouses - Brazil, Russia, India, China and South Africa - is expected to launch plans this week for a joint development bank and measures to bring their stock exchanges closer together.
Officials say the initiatives will take time as they need to sort out details. But they herald a new level of ambition for a bloc that brings together about half the world’s people. The Middle East and energy security will also be discussed, officials say.
Source: FIN24
Lack of UK Government action on mandatory reporting of climate change information for companies surprising and disappointing
March 28, 2012-- The UK Department of Environment Food and Rural Affairs (Defra) yesterday announced that a decision has not yet been reached on the introduction of mandatory reporting for companies' greenhouse gas emissions and other climate change-related information, despite missing a number of previously announced dates for a verdict.
Under the Climate Change Act (2008) the Government was required to implement mandatory reporting by April 2012, or else provide Parliament with an account of why it had decided not to do so.
The explanatory document produced by Defra stated that:
“Ministers are currently considering the analysis of responses to a public consultation in the summer 2011; an analysis of the costs and benefits of different options aimed at encouraging corporate reporting of greenhouse gas emissions; and the review of evidence for how corporate reporting helps the UK meet its climate change objectives.”
Source: CDP
FTSE Licenses NYSE Euronext With The Industry Classification Benchmark (ICB) Across Five Exchanges Worldwide
March 27, 2012--FTSE Group ("FTSE"), the award winning global index provider, today announces that NYSE Euronext (NYX), a leading global operator of financial markets and provider of innovative trading technologies, will be adopting the widely-used international sector classification standard-Industry Classification Benchmark (ICB)
-across its affiliated exchanges in Belgium, France, the Netherlands, Portugal and the US.
NYSE Euronext compiles around 100 ICB classified sector-specific indices in the US and Europe, providing international investors with a range of accurate and robust sector investment options. More than 1,450 companies listed on the NYSE Euronext European Regulated Markets are assigned an ICB classification using the robust methodology, which categorises over 75,000 securities across 73 countries worldwide. NYSE Euronext joins several leading stock exchanges and index providers worldwide to have adopted ICB, altogether representing over 65% of the world’s market capitalisation.
Source: FTSE
World grain prices to stay strong-UN's FAO
FAO chief economist warns of possible panic buying
Says Asian demand for animal feed outpaces expectations
After Argentina drought, European dryness raises worries
U.S. soybean futures soar to six-month high
March 26, 2012--World grain prices should remain "very firm" over the near term as demand from Asia exceeds forecasts and dry weather cuts into supply, the senior economist of the U.N.'s Food and Agriculture Organization (FAO) said on Monday.
South American corn and soy yields took a beating from drought this season, while China's rapidly growing middle class continues its love affair with beef steaks. The shift in diet has held strong in the face of the country's economic slowdown, underpinning demand for corn and soymeal used to feed cattle.
Source: Reuters
Thomson Reuters Selected To Power Dow Jones Indexes' US Index Data Business
Deal Includes Iconic Dow Jones Industrial Average
March 26, 2012--Thomson Reuters today announced that its Elektron high-performance trading and data infrastructure has been selected by Dow Jones Indexes to power the index provider’s US index data business, which includes the iconic Dow Jones Industrial Average.
Elektron will deliver a comprehensive data solution designed to ensure scalability, robustness and performance for Dow Jones Indexes’ real-time US index-data business. The Elektron data integration and distribution solution includes low-latency direct feeds for US index constituent prices along with corporate actions and company fundamentals to support intelligent research and market-moving index calculations.
The deal expands the existing collaboration between the two companies – Thomson Reuters currently supplies real-time data for Dow Jones Indexes’ international indexes.
Source: Thomson Reuters
ETFS Precious Metals Weekly: Gold ETPs See Largest Outflows in 3 Months, Spec Futures Longs Drop Towards April 2009 Lows
March 26, 2012--Global gold ETPs see largest outflows in 3 months as gold price fall shakes out short-term investors. Sustained gold price weakness and a pull-back in broader risk positions caused ETP
investors to pare back gold holdings last week. Total global outflows
amounted to around 0.7mn ounces or around $1.1bn at the current
gold price.
This compares to total gold inflows of around 1.7mn ounces ($2.9bn at current gold price) up until the previous week. The gold ETP selling coincides with a further large-scale clearing of speculative futures market positions, with the latest CFTC data (data to March 20) showing that net speculative longs in the futures market have dropped back down towards April 2009 lows (see positioning charts on page 4). The gold price decline and investor selling has been sparked by upward revisions to the US rate outlook (and related US dollar strength) as US economic growth has continued to improve. It appears that shorter-term investors, recognizing the near-term headwinds to further gold price gains resulting from current improving US growth prospects, are trimming positions. However, with real interest rates expected to remain structurally low in most reserve currency countries, sovereign debt and financial system risks still high and structural demand from emerging markets and central banks still in their early stages, it is unlikely the recent price declines will shake out longer-term gold ETP investors. With net long speculative positions now near April 2009 lows, a firmer base has been set for future long-term price gains.
Indian jeweller strike dents physical demand for gold. Indian jewellers were on strike last week, protesting the doubling of government import duties on imported gold. With jewellers closed, the world’s largest jewellery market remained at a standstill, depriving the gold market of a key source of physical demand.
Platinum group metals slump on Chinese PMI decline. Platinum and palladium prices fell sharply last week on fears of a sharp slowdown in China after the advance PMI manufacturing gauge for March printed below expectations, at 48.1. While the manufacturing sector is softening, it should not be a major concern for platinum group metal investors, as industrial production and fixed asset investment remains robust.
visit www.etfsecurities.com for more info
Source: ETF Securities
Dubai Gold & Commodities Exchange Weekly Market Commentary-March 25, 2012
March 25, 2012--Economic Data Overview
For a long time traders knew where the boundaries were in terms of the main drivers behind directional sentiment, but now that has begun to change. The outlook for the US economy is at the centre of this dilemma.
In the last week, the Fed chairman has continued to stress an accommodative narrative and his concern is that household spending needs to increase in the US to help the economy recovery. He has also spoken about the need for further initiatives to address the European crisis, particularly within the banking system, where he believes external balances need to be reduced to spur growth and competitiveness. However, at an Asian investment conference, the St Louis Fed President, James Bullard, stated that US monetary policy may be at a turning point. His focus is on the increased risk of inflation and the difficulty in managing a trend in higher prices, by boosting the economy for too long when the signs of recovery are becoming more apparent with every new month's economic data. His view is closer to the interest rate forward market which anticipates an increase in the US rates between the third and four quarter of 2013 instead of the 2014 projection that Ben Bernanke has forecast.
The major global stock market indices' posted their worst weekly performance of 2012 last week. However, as many of the stock markets have not had a down week in the year so far, aside from last week, that headline in financial news wires is far from ominous. History suggests that the risk of inflation and economic recovery is often best represented by stock market investors, who are looking to future growth rather than current conditions. In the latter stages of most economic down turns stock markets regularly post new highs. Last week, more investment analysts joined the bullish camp and suggested that it was a good time to leave defensive equity holdings and look for growth stocks that will perform as the US economy continues to strengthen
Source: Source: Dubai Gold & Commodities Exchange (DGCX)
Synthetic route has real appeal
March 23, 2012--When correlations go to one; when securities are hard to borrow; and when banks are looking to do bespoke trades rather than commoditised executions, prime brokers are increasingly turning to a common solution: Delta one.
Delta one is so-named after the Greek symbol that indicates “change”, because it strives to create derivatives for clients that replicate the performance of an underlying instrument – a change of one-to-one. It is also known as “synthetic”, as opposed to “cash”, in which the client owns the underlying instruments directly.
Source: FT.com
