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Goldman's Memo on how to Cash in on Euro Crisis
September 2, 2011--Goldman Sachs showered its hedge fund clients with ideas on how to profit from financial chaos in the eurozone, as markets gyrated wildly last month.
The giant investment bank provided ideas for complicated derivatives trades that would pay off if confidence ebbed in the soundness of the European banking system, and a top trading strategist told clients he believed the banks would need $1 trillion of extra capital to weather the crisis.
Investors Gear Up For Possible Rate Cuts In Emerging Markets
September 2, 2011--Investors are preparing for the possibility of interest-rate cuts in emerging markets, a shift that would mark a sudden reversal in monetary policy in countries where central banks have in recent months been on rate-raising campaigns.
Brazil's central bank set the ball rolling Wednesday with a surprise reduction that came sooner than markets had expected, bringing its target Selic rate down by 50 basis points to 12%.
Diw Jones-UBS Commodity Indexes- August 2011 Performance Report
August 1, 2011--The Dow Jones-UBS Commodity Index was up 0.99% for the month of August. The Dow Jones-UBS Single Commodity Indexes for Coffee, Corn and Gold had the strongest gains with month-end returns of 18.51, 13.57%, and 12.29%, respectively.
The three most significant downside
performing single commodity indexes were Orange Juice, Tin and Nickel, which were down 17.48%, 13.28%,
and 11.25% respectively, in August.
Year to date, the Dow Jones-UBS Commodity Index is up 1.26% with the Dow Jones-UBS Silver Sub-Index posting the highest gain of 34.61% so far in 2011. Dow Jones-UBS Wheat Sub-Index has the most significant downside YTD performance, down 16.83%.
August 2011 Market’s Measure Report - A Monthly Report From Dow Jones Indexes On The Performance Of U.S., European, Asia And Other Global Stock Market Indexes
September 1, 2011--Dow Jones Industrial Average Posts 4.36% Loss in August, European Stocks Lose 10.67%, Asia Falls 8.01% and World Equities Fall by 6.67%
Utilities Sector Posts Biggest Gain for August
Automobiles & Parts Sector Takes the Hardest Hit for August
The Dow Jones Industrial Average fell 4.36% in August, closing at 11613.53.
Stock market indexes in Europe, Asia and globally were down in August, according to monthly figures from global index provider, Dow Jones Indexes.
The Dow Jones Industrial Average fell 4.36% in August, closing at 11613.53. Year-to-date, the index is up 0.31%.
The Dow Jones Europe Titans 80 Index is down 10.67% for August, closing at 1397.64. Year-to-date, the index is down 7.59%.
The Dow Jones Eurozone Titans 80 Index is down 13.35% for August, closing at 1340.98. Year-to- date, the index is down 10.98%.
EU quizzes D.Boerse-NYSE rivals on entry barriers
EU Commission asking rival platforms about merger impact
Concerned if deal would block entry of new players
Wants to find out extent of OTC competition with exchanges
EU has set Dec. 13 deadline to decide on deal
September 1, 2011--EU regulators are examining whether a combined Deutsche Boerse (DB1Gn.DE) and NYSE Euronext would block the entry of players such as BATS Europe, Chi-X Europe, The Order Machine and Turquoise into derivatives trading.
Regulatory approval from the European Commission is seen as the biggest hurdle in the two exchanges' bid to create the world's largest exchange operator handling stocks, futures, options and clearing on both sides of the Atlantic.
BlackRock New ETF Landscape Report: Industry Highlights – July 2011
August 31, 2011--At the end of July 2011, the global ETF industry had 2,847 ETFs with 6,370 listings and assets of US$1,444.8 Bn, from 148 providers on 51 exchanges around the world. This
compares to 2,282 ETFs with 4,872 listings and assets of US$1,095.2 Bn from 124 providers on 42 exchanges at the end of July 2010.
Anniversaries
29 January 2011 marked the 18th anniversary of ETFs in the United States.
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9 March 2011 marked the 21st anniversary of the first ETF globally, which listed in Canada in 1990.
11 April 2011 marked the 11th anniversary of ETFs in Europe.
27 August 2011 marked the 10th anniversary of ETFs in Australia
Assets
ETF assets have increased by 0.1% from US$1,442.7 Bn in June 2011 to US$1,444.8 Bn in July 2011, compared to the 1.9% decrease in the MSCI World Index in US
dollar terms.
US$22.6 Bn of net new assets went into ETFs/ETPs in July 20112. US$13.8 Bn net inflows went into equity ETFs/ETPs, of which US$11.9 Bn went into ETFs/ETPs providing exposure to developed market equities and US$1.9 Bn went into ETFs/ETPs providing exposure to emerging market indices. US$3.1 Bn net inflows went into fixed income ETFs/ETPs, of which US$1.0 Bn went into ETFs/ETPs providing high yield exposure, while inflation linked ETFs/ETPs experienced US$0.3 Bn
net outflows. US$5.7 Bn net inflows went into commodity ETFs/ETPs, of which US$6.5 Bn net inflows went into ETFs/ETPs providing exposure to precious metals, while ETFs/ETPs providing exposure to energy experienced US$0.9 Bn net outflows. Leveraged and inverse ETFs/ETPs experienced US$0.9 Bn net outflows, of which leveraged ETFs/ETPs experienced US$0.6 Bn net outflows and inverse ETFs/ETPs experienced US$0.3 Bn net outflows.
YTD through the end of July 2011, ETF assets have increased by 10.2% from US$1,311.3 Bn to US$1,444.8 Bn, which is greater than the 2.0% increase in the MSCI World Index in US dollar terms. This compares to a 5.7% increase in assets over the same period in 2010.
YTD through the end of July 2011, US$104.8 Bn of net new assets went into ETFs/ETPs1. US$65.8 Bn net inflows went into equity ETFs/ETPs, of which US$62.8 Bn net inflows went into ETFs/ETPs tracking developed market indices and US$3.1 Bn net inflows went into ETFs/ETPs tracking emerging market indices. US$22.8 Bn net inflows went into fixed income ETFs/ETPs, of which US$5.0 Bn went into corporate bond ETFs/ETPs, while money market ETFs/ETPs experienced US$0.6 Bn net outflows. US$12.1 Bn net inflows went into commodity ETFs/ETPs, of which ETFs/ETPs providing exposure to precious metals saw US$5.4 Bn net inflows while ETFs/ETPs providing exposure to energy saw net outflows of US$1.6 Bn. US$5.2 Bn net inflows went into leveraged and inverse ETFs/ETPs, of which US$3.9 Bn went into leveraged inverse ETFs/ETPs and US$1.8 Bn went into inverse ETFs/ETPs, while leveraged ETFs/ETPs experienced US$0.6 Bn net outflows.
YTD through the end of July 2011, US$104.8 Bn net new asset flows went into ETFs/ETPs, greater than the US$76.8 Bn net inflows over the same period in 2010². Net new asset flows into equity ETFs/ETPs were US$65.8 Bn YTD, greater than the US$32.3 Bn net inflows over the same period in 2010 while fixed income ETF/ETP net inflows were US$22.8 Bn YTD, less than the US$32.0 Bn net inflows over the same period in 2010. Net inflows into commodity ETFs/ETPs were US$12.1 Bn YTD, less than the US$12.7 Bn net inflows over the same period in 2010.
ETF providers
Globally, iShares is the largest ETF provider in terms of both number of products and assets, with 475 ETFs and US$618.1 Bn respectively, reflecting 42.8% market share; State Street Global Advisors is second with 137 ETFs, assets of US$204.0 Bn, and 14.1% market share; followed by Vanguard with 69 ETFs, assets of US$174.5 Bn and 12.1% market share; at the end of July 2011.
The top three ETF providers, out of 148, account for 69.0% of global ETF AUM, while the remaining 145 providers each have less than 4.0% market share. This compares to 70.6% market share in the top three out of 124 providers, at the end of July 2010.
14 new providers have entered the industry in 2011, launching their first ETFs, while 40 firms have indicated plans to launch their first ETF in the future.
ETFs
In July 2011, the number of ETFs increased by 0.8% with 26 new ETFs launched, while four ETFs delisted.
YTD through the end of July 2011, the number of ETFs have increased by 15.7% with 419 new ETFs launched, while 12 ETFs have delisted and 20 ETFs have
merged. This compares to a 17.3% increase in the number of ETFs over the same period in 2010, when 368 new ETFs launched, while 33 ETFs delisted.
There are currently plans to launch 1,051 new ETFs compared to 970 at the end of July 2010.
The top 100 ETFs, out of 2,847, account for 61.8% of global ETF AUM. 245 ETFs have greater than US$1.0 Bn in assets, while 1,808 ETFs have less than
US$100.0 Mn in assets, 1,465 ETFs have less than US$50.0 Mn in assets and 567 ETFs have less than US$10.0 Mn in assets.
ETFS Precious Metals Weekly: Gold sell-off attracts bargain hunters as Bernanke tempers QE3 Optimism
August 30, 2011--Gold spot price holds above $1,750/oz despite second CME gold futures margin hike in as many weeks. The CME raised margin requirements on COMEX gold futures positions by 27%, with COMEX gold margin requirements up 56% in the past two weeks. The potential for further hikes looks more limited based on the historical relationship between gold price volatility and COMEX margin requirements
as a percent of the gold price. The rise comes amidst a similar hike in gold futures investment on the Shanghai Gold Exchange.
Gold buyers emerge as prices drop in the run-up to Bernanke’s eagerly
anticipated monetary policy speech. A rebound in equity and cyclical assets
early in the week, together with a second gold futures margin hike by the CME, put initial pressure on gold prices. However prices failed to drop below $1,760, with UBS
reporting the emergence of strong physical buying interest in no.1 global gold market India as prices dropped back after seven consecutive weeks of gains.
Silver, platinum, palladium prices constrained by growth worries as Bernanke refuses to give further elaboration on the possibility of ‘QE3’. Prices for the three metals gave up early gains last week as data confirmed that ongoing bank sector anxieties, slowing growth, and political infighting over the sovereign debt bailout are weighing heavily on consumer and business confidence in European manufacturing powerhouse Germany. US Q2 growth was also revised down more than expected late last week.
World no.2 platinum miner Impala Platinum warns Zimbabwe demands for indigenous ownership threatens up to $10 billion of investment. Almost onethird of Impala’s platinum reserves are located in Zimbabwe, home to the world’s second largest platinum reserves behind South Africa. Impala figures show that its reserves declined 5% yoy in the year to June 30, reflecting changes to its mining plan and depletion of reserves.
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Public Debt in Advanced Economies and its Spillover Effects on Long-term Yields-IMF Working paper
August 30, 2011--Summary: Several models establish a positive association between public debt ratios and long-term real yields, but the empirical evidence is not always conclusive. We reconsider this issue, focusing in particular on possible spillover effects of large advanced economies’ debt levels to other economies’ borrowing yields, especially in emerging markets.
We extend the existing literature by using real time expectations of fiscal and other macroeconomic variables for a large sample of advanced and emerging economies. We show that an increase in the public debt levels of large advanced economies - especially the United States - spills over to both emerging markets and other advanced economies’ long-term real yields and that this effect is significant at the current levels of advanced economies’ debt ratios.
Institutional investors turning to private equity as source of alpha
August 31, 2011--Institutional investors are turning to private equity as a source of alpha at a time when low returns are expected for several asset classes in the current financial context.
According to a survey by SEI and Greenwich Associates, institutional investors are keen to increase their allocation to private equity but are asking fund managers to improve reporting and risk-management measures.
Communication of Central Bank Thinking and Inflation Dynamics
August 29, 2011--Summary: This paper studies the role of central bank communication of its economic assessment in shaping inflation dynamics. Imperfect information about the central bank’s assessment - or the basis for monetary policy decisions - could complicate the private sector’s learning about its policy response function.
We show how clear central bank communication, which facilitates agents’ understanding of policy reasoning, could bring about less volatile inflation and interest rate dynamics, and afford the authorities with greater policy flexibility. We then estimate a simple monetary model to fit the Mexican economy, and use the suggested paramters to illustrate the model’s quantitative implications in scenarios where the timing, nature and persistence of shocks are uncertain.
view IMF paper-Communication of Central Bank Thinking and Inflation Dynamics