CFA Society Chicago NewsBrief
Apr. 22, 2014

Chicago area aims to attract more foreign investments
Chicago Tribune
Chicago ranks high on lists of the world's global cities, most recently slotted as No. 7 in an A.T. Kearney index. New York, London, Paris, Tokyo, Hong Kong and Los Angeles led the roster. But a 2012 report by the Chicago Council on Global Affairs criticized regional attraction efforts as lacking in focus and underperforming comparable global cities such as Toronto and Bogota, Colombia. Government agencies do not issue foreign investment data by metro area, but research by private firms indicates that Illinois, whose economy is dominated by the Chicago region, lags other populous states.More

Is your Board living up to its potential?
CFA Chicago
Seventy-five percent of the 1,000 largest USA companies do not have the management structure, performance metrics and long-term incentives for balanced growth, innovation and long-term value creation for shareholders. The short-term and mostly compliance focus of many boards is a barrier to creating future value. It is time to rethink the strategic planning horizon, operational performance metrics and longest accountable performance period for named officers (most companies have a three-year or less incentive plan). Keynote speaker Tim Koller is coming to The Standard Club on April 24 at 3 p.m. to discuss the roles and expectations of boards and C-suite executives.More

The dynamics challenging traditional thinking
CFA Chicago
Many frameworks and finance models were created in an environment that shaped our collective experience over the last 30-50 years. Many dynamics in the investment landscape have recently changed: geopolitical instability, an expanded role of governments in capital markets and correlations between previously believed unrelated securities has become a challenging reality. Along with those facets of the investment landscape, the industry is now adapting to the effects of high-frequency trading. On Thursday, May 1, join CFA Chicago at The University Club to discover how recent changes in the global investment landscape should shape your strategic and tactical investment decisions.More

A rising yield bond environment — competition for the yield
CFA Chicago
Join CFA Chicago on Tuesday, April 29 from 12 - 1 p.m. for the Distinguished Speaker Series featuring David Rosenberg, Chief Economist and Strategist for Gluskin Sheff and Associates. Fees for members are $45 dollars, the student-members fee is $10, and non-members are welcome to join for $55. This series also qualifies for credit under the guidelines for the CFA Institute Professional Development Program. For those that can't attend in person, CFA is offering a webcast. The webcast is free for CFA Chicago members, CFA Chicago student members, all other CFA society members, and is available for a $40 fee to non-members.More

Book review: Crony Capitalism in America
CFA Institute's Enterprising Investor
According to this provocative book, the U.S. economy is morphing into crony capitalism, a system in which business success is fostered by relationships between business and government. To gain a competitive edge or to limit competition, business interests lobby the government to tilt — rather than level — the playing field by granting their particular companies special favors. The end result is a system in which the few are enriched at the expense of the many. More

Chicago's $20 million club
Crain's Chicago Business
All but a handful of local public companies have filed their annual compensation disclosures for 2013, and those that haven't yet aren't likely to have paid their CEOs as much as the top four. At this point, we can assess how well the hometown honchos made out last year. And 2013 was a good year for most, according to ISS Corporate Services, a Rockville, Md.-based compensation research and data provider. Chicago-area CEOs made more money and got bigger raises than their counterparts across the country. Median pay at the 78 local companies in ISS' survey was $5.2 million, 48 percent above the national median. The local median rose nearly 20 percent, twice the national increase. More

New US attorney unit targets securities, commodities fraud
Crain's Chicago Business
The U.S. attorney in Chicago has created a new section to focus on prosecuting securities and commodities fraud, creating such a focus here for the first time. The new securities and commodities fraud section was formed last month in the criminal division and includes 12 prosecutors led by Assistant U.S. Attorney Jason Yonan. Zachary Fardon, who was appointed in October as U.S. attorney for the Northern District of Illinois, talked about the new section during a panel discussion at a legal education event at Willis Tower.More

Yellen says Federal Reserve considering tougher rules for big banks
Los Angeles Times
The Federal Reserve is considering tougher rules for big banks to keep credit flowing in case of another financial crisis, Fed Chairwoman Janet L. Yellen said. Although officials from the Fed and regulatory agencies approved more stringent requirements for the eight largest banks, Yellen said additional measures might be needed to keep short-term credit markets from freezing up during stressful financial conditions. "In 2007 and 2008, short-term creditors ran from firms such as Northern Rock, Bear Stearns and Lehman Bros., and from money market mutual funds and asset-backed commercial paper programs," Yellen said in a video speech to the Federal Reserve Bank of Atlanta's financial markets conference. More

William Blair's Brian Singer talks global stocks
Most mutual fund managers spend their days mulling individual stocks and bonds. Brian Singer takes a decidedly broader view. As the lead manager of the William Blair Macro Allocation Fund, Singer buys and sells sectors and asset classes. Using futures contracts and exchange-traded funds, he trades in and out of stocks, bonds, and currencies around the globe. In all instances, the guiding principle is relative valuation. Since the beginning of the year, the 11-month-old fund has generated a return of 10.3 percent, almost eight percentage points above the average Morningstar "multialternative" fund.More

Bank of America's financial crisis costs become a recurring nightmare
Reuters via Chicago Tribune
Bank of America Corp's financial crisis hangover is lasting longer than expected, leading some investors to wonder if the massive litigation expenses being incurred have become a recurring cost of doing business instead of being dismissed as one-time items. The bank on recently posted $6 billion of litigation costs for its first quarter, far exceeding the $3.7 billion of settlement costs that investors had previously known about. More

Chicago area aims to attract more foreign investments
Chicago Tribune
Chicago ranks high on lists of the world's global cities, most recently slotted as No. 7 in an A.T. Kearney index. New York, London, Paris, Tokyo, Hong Kong and Los Angeles led the roster.More

Strong start for CBOE short-term volatility index options
First-day trading volume for CBOE Short-Term Volatility Index options with weekly expirations totalled an estimated 3,134 contracts, according to data released by the Chicago Board Options Exchange.More

The ever-evolving investment landscape
CFA Chicago
Many frameworks and finance models were created in an environment that shaped our collective experience over the last 30-50 years. Recently many dynamics in the investment landscape have changed.More

Gov. Quinn, let Chicago solve its pension crisis
Chicago Tribune
Chicago's financial future is at genuine peril, even without the huge new annual payments into police and fire pension funds that are about to kick in. The Chicago pension crisis that burdens an array of Chicago funds is Chicago's problem and Chicago, to its credit, at long last has negotiated a partial solution. Now, though, Chicago needs that gubernatorial signature.More

HFT lawsuit against CME 'peeks' just the first salvo?
Traders Magazine
The lawsuit filed against the CME Group, Inc. over allegations the company allowed high-frequency traders an early peek at its order info, is a "horrible precedent" that we will likely see more of, said one markets expert. "There's a saying, 'Where there's a hit, there's a writ'," said Prof. James J. Angel, a visiting professor of finance at The Wharton School of The University of Pennsylvania. "With all the negative attention and misconception about high-frequency trading since the release of Michael Lewis's Flash Boys, lawsuits making these allegations are going to become more prevalent," he added.More