Global ETF News Older than One Year
IMF Fiscal Monitor Update-Staying the Course on Fiscal Adjustment
June 17, 2011--Consolidation is proceeding at a broadly appropriate pace in many advanced economies —
notably in most of Europe and in Canada—helped by recovering activity and revenues. In the United States, the 2011 deficit will be lower than previously forecast and similar to 2010 in
cyclically adjusted terms, thereby making the planned fiscal adjustment in 2012 less abrupt. Consensus on a credible medium-term fiscal adjustment plan is urgently needed. Similarly,
defining a more detailed medium-term adjustment plan is essential in Japan.
Rising risk perceptions in Greece, Ireland, and Portugal underscore the need to implement their adjustment programs and to develop a comprehensive and consistent approach to crisis management in the euro area. In many emerging economies, fiscal consolidation is proceeding at an appropriate pace. In others, fiscal policy needs to be tightened faster than currently envisaged, to reduce overheating risks.
view the IMF Fiscal Monitor Update-Staying the Course on Fiscal Adjustment
Source: IMF
Resource Windfalls, Macroeconomic Stability and Growth: The Role of Political Institutions
June 17, 2011--Summary: We use a new dataset on non-resource GDP to examine the performance of commodity-exporting countries in terms of macroeconomic stability and economic growth in a panel of up to 129 countries during the period 1970-2007. Our main findings are threefold.
First, we find that overall government spending in commodity-exporting countries has been procyclical. Second, we find that resource windfalls initially crowd out non-resource GDP which then increases as a result of the fiscal expansion. Third, we find that in the long run resource windfalls have negative effects on non-resource sector GDP growth. Yet, the effects turn out to be statistically insignificant when controlling for government spending. Both the effects of resource windfalls on macroeconomic stability and economic growth are moderated by the quality of political institutions.
Source: IMF
Will Natural Gas Prices Decouple from Oil Prices across the Pond?-IMF Working paper
June 17, 2011--Summary: We show that US natural gas prices have decoupled from oil prices following substantial institutional and technological changes. We then examine how this interrelationship has evolved in Europe using data for Algeria, one of Europe’s key gas suppliers.
Taking into account total gas exports and cyclical conditions in partner countries, we find that gas prices remain linked to oil prices, though the nexus has loosened. Both high oil prices and a modest industrial recovery in partner countries have kept gas exports at low levels in recent years, suggesting changing market forces. The paper then shows how such shifts can have important macroeconomic implications for a big gas exporter such as Algeria.
view the IMF Working paper-Will Natural Gas Prices Decouple from Oil Prices across the Pond?
Source: IMF
TMX Group – London Stock Exchange Group Merger Proposal Receives Positive Recommendation from Glass Lewis
June 17, 2011-- TMX Group Inc. today announced that Glass, Lewis & Co., LLC (Glass Lewis), a leading independent governance analysis and proxy voting firm, has published a report recommending that TMX Group shareholders vote in favour of TMX Group's proposed merger with London Stock Exchange Group plc (LSEG).
The Glass Lewis report stated: “In light of our approval of the LSE-TMX merger from both a strategic and financial perspective, our consideration of the factors discussed [in our report], and the unanimous support of the board, we believe the proposed merger with LSE is in the best interest of shareholders.”*
TMX Group will hold an Annual and Special Meeting of shareholders to approve the merger agreement and other resolutions on June 30, 2011 at 10:00 a.m. (ET). The meeting will be held at the Design Exchange, 234 Bay Street, Toronto. For information about the merger and how to vote, please visit www.tmx.com/merger.
Source: About TMX Group (TSX-X)
Agriculture: Higher prices here to stay, says OECD-FAO report
June 17, 2011--Higher food prices and volatility in commodity markets are here to stay, according to a new report by the OECD and the UN Food and Agriculture Organisation (FAO).
The OECD-FAO Agricultural Outlook 2011-2020 says that a good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the Outlook states that over the coming decade real prices for cereals could average as much as 20% higher and those for meats as much as 30% higher, compared to 2001-10. These projections are well below the peak price levels experienced in 2007-08 and again this year.
view the OECD-FAO Agricultural Outlook 2011-2020
Source: OECD
Maple Group Comments On Glass Lewis & Co. Report
June 17, 2011-- Maple Group Acquisition Corporation ("Maple"), a corporation whose investors comprise 13 of Canada's leading financial institutions and pension funds, today commented on the report issued on June 16, 2011 by Glass Lewis & Co., a proxy advisory firm based in San Francisco, California.
In its report, Glass Lewis called Maple's proposed transaction "strategically compelling" but recommends that TMX Group shareholders should vote for the LSE takeover, largely on the basis that "…[Glass Lewis] believe[s] the LSE-TMX merger has a greater probability of obtaining all necessary regulatory approvals."
Maple believes this conclusion, and much of the information and analysis in the Glass Lewis report, is deeply flawed. Specifically, Maple noted the following:
In reaching this conclusion, Glass Lewis does not mention, and appears to give no weight to, the extraordinary condition of the LSE offer which requires provincial securities regulators in Quebec and Ontario to abandon a key Canadian public interest protection limiting any one shareholder from owning more than 10% of TMX Group.
Glass Lewis does not mention, and appears not to have been aware of or considered, the statement made by Ontario Minister of Finance Dwight Duncan on June 9, 2011, in which Minister Duncan said,
"…the 10% ownership rule for the TMX is critically important…I encourage Industry Canada and, to the extent it becomes involved, the Competition Bureau to, where appropriate, take the decisions of the securities commissions into consideration. The commissions are conducting a public comment process and will carefully consider the views of the public in making their determination about each transaction."
Source: Maple Group Acquisition Corporation
IASB rules to hit profit reporting
June 17, 2011--Companies that follow international accounting standards will no longer be able to pad their reported profits by predicting strong returns on investments held by their pension schemes, and will not be able to “smooth” earnings by averaging investment gains and losses over several years, under new rules unveiled on Thursday.
The International Accounting Standards Board, which sets rules aimed at making it easier for investors to compare the results of companies based in different jurisdictions, said the new rules would take effect in January 2013. It first began consulting on the proposals in 2008.
Source: FT.com
TABB Research Examines Electronic Alpha Capture and its Impact on Commission Allocations
New Report Focuses on Buy Side and Sell Side Use of Alpha Capture Systems, the Impact of Systems’ Performance Metrics and Emergence of an Elite Sell-Side Service Based on Pay-for-Performance
June 18, 2011-- At a basic level, electronic alpha capture is poised to become a major work flow tool forevery portfolio manager and broker-dealer to prioritize data points and opinions, pushing the most relevant ideas to the surface.
According to TABB Group in new research, “Alpha Capture: The What, Who and How Much,” this tool can give portfolio managers the freedom to focus on their primary job – generating alpha. Equally important, alpha capture technology could impact how the buy side allocates commission dollars to its research providers.
Not only can this technology enable the highest conviction ideas to “bubble to the top,”says Adam Sussman, a TABB partner, head of global research and co-author with contributing analyst Kerry Massaro, but by tracking and monitoring industry performance, these systems can enable star sales people and broker-dealers to rise above their competition. In the not-so-distant future, the performance metrics within alpha capture systems could be used universally to determine which brokers get paid and how much.
Source: TABB Group
Extreme Bets Versus Euro Rise
June 16, 2011--Hedge funds are making bigger bets on a plunge in the euro, which sank against the dollar Wednesday on growing fears of a Greek debt default. Emboldened by deepening concerns about Europe's sovereign-debt crisis, funds are increasingly willing to wager big money on the chance the euro may sink toward parity with the dollar.
For months, Europe's common currency has swung wildly within a tight range, forcing hedge-fund traders to make relatively modest trades. When worries over Europe's sovereign-debt woes eased, the euro clambered up to $1.50. When fears resurfaced, the currency dropped toward $1.40. But in recent weeks, wrangling between European politicians and central bankers over whether Greece's private-sector creditors should accept losses as part of a new rescue plan has raised the specter of a Greek default as soon as next month. That is prompting some funds to make riskier wagers against the euro using bigger amounts of borrowed cash, observers say.
Source: Wall Street Journal
Protectionist Responses to the Crisis: Damage Observed in Product-Level Trade -IMF Working paper
June 16, 2011--Summary: This paper investigates how trade flows are being affected by new discriminatory measures implemented during the global financial crisis. We match data on behind-the-border measures (e.g., bailouts and subsidies) and border measures implemented through April 2010 to monthly HS 4-digit bilateral trade data. Our estimation strategy relies on a first-differenced gravity equation and time-varying fixed effects to disentangle the impact of new discriminatory measures.
Trade in exporter-importer pairs subject to new measures decreased by 5 to 8 percent relative to trade in the same product among pairs not subject to new measures. These product-level results imply global trade declines at the aggregate level of about 0.2 percent, or $30-35 billion a year. These aggregate figures would be higher, if one third of measures had not been excluded due to incomplete data. The paper then goes on to dissect protectionism’s trade impact by disaggregating measures by type, advanced/developing countries, regions, sectors, and time. Behind-the-border measures are found to have been more harmful than border measures at the product level. Among border measures, impacts tend to be higher for less transparent measures. Advanced countries are found to be responsible for 2/3 of the trade decline due to crisis protectionism, but their exports also absorbed 2/3 of this decline. When breaking down measures in a time dimension, we find that those taken in the first nine months after the Lehman collapse were most harmful and likely continue to constitute a drag on trade.
Source: IMF
