CFA Society Chicago NewsBrief
Apr. 29, 2014

Killing dark pools is CME chairman's fix for stock market
Bloomberg Businessweek
Terrence Duffy, who as executive chairman of CME Group Inc. oversees the world’s largest futures exchange, has a solution for those seeking to fix the U.S. stock market: kill dark pools. While all futures trades happen on exchanges such CME Group’s, only about 60 percent of American equity volume does. The rest takes place on venues including dark pools, where orders are hidden until transactions are completed. That hurts investors because it obscures the true price of stocks, Duffy said during an interview at Bloomberg News headquarters in New York.More

A very powerful antidote — multiple expansion premised on Fed-induced liquidity
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

The geopolitical and macroeconomic 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

Take the stress out of networking
CFA Chicago
On Wednesday, May 14 from 11:45 a.m. to 1:30 p.m., CFA Chicago is hosting a progressive networking luncheon at Petterino's on North Dearborn Street. This event provides ample networking opportunities for members and student members — the luncheon features a three-course meal, and attendees will switch tables after each course. Register now, because space is limited. More

A new era of fiduciary capitalism? Let's hope so
CFA Institute's Enterprising Investor
Five years after the global financial crisis washed over us all, the future of finance is unclear. The debate continues over how to rebuild a financial system that is vibrant and dynamic, that serves society, and that won’t blow up and drag the whole world down every few years. From John Rogers' perspective, a new era of capitalism is emerging out of the fog.More

First Midwest to buy Banco Popular's Chicago business
Crain's Chicago Business
Banco Popular North America is exiting Chicago with the sale of its retail bank here to First Midwest Bancorp Inc. and the planned shutdown of its U.S. headquarters in Rosemont. First Midwest announced that it is paying a 2.5 percent deposit premium for about $750 million in deposits and another $525 million in loans housed in 12 branches of Popular Community Bank, the mainland retail arm of Puerto Rico's largest bank, Popular Inc. That translates into roughly $18 million.More

Chicago talks pension reform while waiting for governor
The Bond Buyer
Chicago needs Illinois Gov. Pat Quinn to sign legislation overhauling two of its pension funds so it can move on to a more elusive fix for its other two funds, the city's top fiscal officer said. "We really need the governor to sign" the legislation overhauling the laborers and municipal workers' funds "so we can begin the tougher task of dealing with police and fire," said Chicago chief financial officer Lois Scott. The legislation trims benefits including cost of living adjustments, and raises city and employee contributions.More

Treasuries irresistible to America's banks awash in cash
America’s banks are regaining their appetite for U.S. government debt. After culling Treasuries and bonds issued by federal agencies last year for the first time since 2007, commercial lenders such as Bank of America Corp. have boosted their holdings every month this year, Federal Reserve data compiled by Bloomberg show. Banks now own $1.85 trillion of the debt, within 2 percent of the record amount held at the end of 2012. More

Corporate pension funding status rises to highest level since 2007
Pensions & Investments
The average funding ratio for the 100 largest U.S. corporate defined benefit plans jumped to 93.5 percent in 2013 — more than 10 percentage points higher than the previous two years and the highest since 2007, according to Pensions & Investments' annual analysis of corporate SEC filings. “I would not be surprised if the funding ratio exceeded 100 percent by the end of this year,” said Andrew Wozniak, the New York-based head of fiduciary solutions, in the investment strategy and solutions group of BNY Mellon Investment Management. More

Bank of America suspends buyback and dividend increase
The New York Times
Bank of America said that it was suspending its share buyback program and a planned increase in its dividend after it discovered flaws in the information it submitted to the Federal Reserve as part of the stress test process. In a statement, the bank attributed the error to an incorrect adjustment related to the treatment of structured notes assumed in its acquisition of Merrill Lynch in 2009. As a result of the error, the bank said, its capital levels are lower than what it had disclosed to the Fed. 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.More

Killing dark pools is CME chairman's fix for stock market
Bloomberg Businessweek
Terrence Duffy, who as executive chairman of CME Group Inc. oversees the world’s largest futures exchange, has a solution for those seeking to fix the U.S. stock market: kill dark pools. While all futures trades happen on exchanges such CME Group’s, only about 60 percent of American equity volume does.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

Fed, with bond taper on autopilot, free to tackle big questions
Chicago Tribune
Federal Reserve policymakers are set to continue paring their massive bond-buying stimulus, but below the smooth surface of a likely unanimous vote lies a deeply divided Fed struggling to lay the groundwork for more difficult decisions ahead. Fed Chair Janet Yellen hinted at the U.S. central bank's broad agenda a couple weeks ago when she laid out three "big" issues officials need to track: the level of slack in the labor market, whether inflation is rising back toward the Fed's 2 percent goal, and the factors that could derail the economic recovery.More

What if retirement advice is completely backwards?
Financial advisers for decades have urged people to load up on equities early in their careers and gradually reduce those holdings by the time they leave the workforce. Sounds logical. When you’re in your 20s, you have plenty of time to bounce back from stock market losses while a big equity allocation gives you the growth you’ll need to build retirement wealth. But as you approach retirement, time is not on your side, and it’s much harder to recover from devastating bear markets of the kind we experienced in 2008-2009. More