CFA Society Chicago NewsBrief
Jun. 24, 2014

What the gap between CPI and PCE means for Fed overshooting
The Wall Street Journal
One of the biggest debates right now over the outlook for inflation is whether the Federal Reserve would allow inflation to overshoot its target — that is, allow inflation to rise above 2 percent for some period of time. Chicago Fed President Charles Evans and San Francisco Fed President John Williams have argued perhaps it should. But when it comes to overshooting 2 percent, the Fed’s choice of target becomes really important.More

Worldview with Weber
CFA Chicago
Axel Weber was elected to the Board of Directors (BoD) at the 2012 AGM and was thereafter appointed Chairman of the BoD. He has chaired the Governance and Nominating Committee since 2012 and became chair of the Corporate Responsibility Committee in 2013. Weber was president of the German Bundesbank between 2004 and 2011, during which time he also served as a member of the Governing Council of the European Central Bank, a member of the Board of Directors of the Bank for International Settlements, German governor of the International Monetary Fund, and as a member of the G7 and G20 Ministers and Governors. Join CFA on Friday, June 27 from 12 - 1 p.m. for the Axel A. Weber Distinguished Speaker Series. Only 5 spots are available, so register now to secure a spot. More

Rieder: A long-standing influencer in the industry
CFA Chicago
Rick Rieder, Managing Director, is BlackRock's Chief Investment Officer of Fundamental Fixed Income, Co-head of Americas Fixed Income and a member of the Executive Committee of the firm-wide Alpha Strategy business, a member of BlackRock's Global Operating Committee and Chairman of the BlackRock Investment Council. Join CFA Chicago on July 29 at 12 p.m. for the Distinguished Speaker Series featuring Rieder.More

Prepare with your peers
CFA Chicago
The Level 1 December 2014 CFA exams will be here before you know it! You are invited to join leaders from CFA Chicago and members from Kaplan Schweser to find out how to best prepare for the CFA exam. Those in attendance will have an opportunity to win a scholarship for a prep-course study package awarded by Kaplan Schweser. Join fellow students on Thursday, July 10 from 5 p.m. to 7 p.m. for a study group kick-off party and open house — the event is free, but you must register to attend.More

Financial advisers: Heed gender differences in your clients' communication styles
CFA Institute's Enterprising Investor
Communication is key in relationships — not only in marriages and partnerships, but also between financial advisers and their clients. But, as we have all learned the hard way, it’s very easy to miscommunicate; albeit unwittingly. Carl Richards, the certified financial planner behind the “Sketch Guy” column in the New York Times, is fond of telling a story about a conversation he and his wife had that illustrates this point.More

How to stop the next bubble
TIME
More than five years after the Lehman Brothers collapse, America still has a bubble problem. The economy is improving, but the country is still poorer and less busy than it should be this long after the official end of the Great Recession. Here’s where actual GDP lines up against where it might be if the economy had returned to its normal path.More

BlackRock shifts pay formula for US sales force
Reuters
BlackRock Inc., the world's biggest money manager, has made a radical shift in the way it pays its retail mutual fund salespeople in the United States, a top executive said. Rather than pay a percentage of the gross sales made through scores of brokerage firms, independent financial advisers, banks and insurance firms, BlackRock is using a "net" number that better reflects the profitability of the sale, Frank Porcelli, head of the fund company's U.S. retail business, said at the Reuters Global Wealth Management Summit in New York.More

Is Britain beating the US in the race for Chinese investment?
Forbes
According to a study released last year, China’s insurance funds have $1.19 trillion in capital, and one of their major investment targets is real estate outside of their home market. So far, however, the United Kingdom seems to be winning the battle for the hearts and wallets of China’s biggest property buyers, despite the recovering U.S. market.More

1871 gets $2.5 million from state for expansion
Crain's Chicago Business
The long-awaited expansion of 1871 is underway, thanks to a $2.5 million state grant. The city's best-known incubator for tech startups is growing by 50 percent, adding 25,000 square feet next to its home on the 12th floor of the Merchandise Mart. The expansion, which has been in the works since Howard Tullman was named CEO of 1871 late last year, will provide startups a place to grow while staying near other entrepreneurs. More

Mario Gabelli reveals second-half playbook
CNBC
With stocks setting new all-time highs, legendary value investor Mario Gabelli shared three of his top picks for the second half of 2014. "The market — based on earnings, based on multiples, based on valuations — is OK, but there's no margin of safety, and you can have a shock," he said on CNBC's "Halftime Report." Gabelli, who oversees $48 billion in assets as CEO and chairman of the Gabelli Funds, took into consideration potential risks in equity markets.More

What the gap between CPI and PCE means for Fed overshooting
The Wall Street Journal
One of the biggest debates right now over the outlook for inflation is whether the Federal Reserve would allow inflation to overshoot its target — that is, allow inflation to rise above 2 percent for some period of time. Chicago Fed President Charles Evans and San Francisco Fed President John Williams have argued perhaps it should. More

'Yellen Index' flashes imminent Fed tightening
Financial Times
Investors are not betting Janet Yellen will follow a fellow central banker’s lead and declare interest rate rises “could happen sooner than markets currently expect," according to Federal Reserve Chairman Mark Carney. What if we were to look not at what Yellen says, but at what Yellen has done? We might then conclude that the Fed’s first rate hikes could indeed happen sooner than expected.More

It pays to emulate the accountant who proved value investing works
Forbes
The stock market is supposed to be glamorous. It’s supposed to be well-coiffed men in finely tailored suits — guys who know what the next big thing will be before you know what the last big thing was–barking orders to buy, BUY! It’s supposed to be tech stocks with explosive earnings and new companies with Gotta-Have-It products and soaring shares.More

Unconstrained bond strategies not for the button-down types
Pensions & Investments
For some asset owners, getting more yield out of fixed income means letting go. Unconstrained strategies have the flexibility to shift tactically from traditional fixed income into bond alternative strategies, but it's often a difficult sell to investment executives at pension funds, endowments and foundations who are used to working with a benchmark.More

The perils of low volatility
FT Adviser
The fall in the Vix index — which is seen as a barometer of investor sentiment — to a seven-year low of below 11 in early June has focused minds again on the catalysts that might unleash new waves of turbulence into the world’s equity markets. The Chicago Board Options Exchange Volatility index, or Vix, measures traders’ expectations for price swings of stocks included in the S&P 500 index.More