Financial News BriefNov. 7th – Nov. 11th 2011

By:Joanna AlexanderKathy Ratajczak

Will ProutCourtney Potter

Monday Nov. 7th

SEC to propose money fund reforms

What practices do money market funds currently employ?

• Provide investors with a relatively safe alternative to savings accounts by investing in only low risk commodities

• Funds encourage investors to believe they can never lose moneyWhat does the SEC propose to

regulate?• Require money market funds to hold capital on the off chance that there are losses

• Require money market funds to use a floating measure of their net asset value, making it more difficult for investors to withdraw cashIs what the SEC proposing beneficial?

TuesdayNovember 8, 2011

• Financial Markets held their breath on Tuesday as Italian Prime Minister Silvio Berlusconi’s reform shy government teetered on the brink.

• Rome has displace Athens as the epicenter of the euro zone’s sovereign debt crisis.

• Italy’s government bond yields have approached unsustainable levels.

• Italian 10 year borrowing costs touched a new record 6.71% on Tuesday raising the risk that Rome’s massive debt , the 2nd highest in Europe at 120% of GDP could spiral out of control.

Tuesday November 8, 2011

Election Day!Did You Vote???

Do you think a Republican or Democratic victory effects the stock market differently?

Once election day is over, stocks are likely to jump---regardless of which party wins!!!

• Stocks have rallied after every mid-term since 1942!

• Stocks surge on average 18.3% in the 200 trading days after mid-term elections

• The S&P 500 chalked up its biggest 200 day gain, 30.5% in 1942, as the tide began to turn in WWII

• The smallest gain 3.9% came in 1946 as investors fretted that the economy would sink into another depression

• The market has been essentially neutral about party changes in one or both houses of Congress

What about in a Presidential-Cycle?

• Historically it has been a good predictor of stock performance.

• Since 1940 the S&P has returned a cumulative 9.3% on average in the first two years of presidential terms—slightly more than a third of the 25% cumulative return in the second two years!

• Recently though, the presidential-cycle indicator has fallen flat

• Bottom Line: Markets often find a way to upset our preconceived notions!

Thursday, November 10th

Federal gov't runs $98.5B deficit in October

• October starts the fiscal year for 2012• In October last year the gov’t had a deficit of

140.4B• New accounting practices took 31B off of this

years books• Federal benefits are usually paid on the 1st of

each month but Oct. 1st was a Saturday and the benefits were put on last years deficit• The gov’t had a deficit of 1.41T in 2009,

1.29T in 2010, and 1.3T in 2011• The deficit for 2012 is predicted to be 973B

How do you feel about

Government Spending?

Unemployment Aid Hits 7-Month Low

• The number of people who applied for unemployment benefits last week dropped to

390,000• DOL said this is the lowest it has been since April• The data suggest layoffs are easing and the economy grew slightly better over the summer

than the government had estimated a month ago• The downward trend in applications suggests

businesses are laying off fewer workers• Still, applications need to consistently drop below

375,000 to signal sustained job gains• The have not been at the level since February

Friday, November 11th France lashes out at S&P's “shocking”

error• France reacted with outrage after the Standard &

Poor's ratings agency accidentally sent out a message saying it was downgrading France's

prized "AAA" credit rating• The interest rate France pays to borrow money

closed up 3.37% on Friday• That is the highest rate since early July

• France and Germany's "AAA" credit ratings are the bedrock of Europe's bailout fund

• The accident came just as Greece and Italy seemed to be getting on the right track by

establishing new interim governments

SEC disciplines employees over Madoff

• The SEC said they had disciplined eight employees for their failure to detect the infamous Madoff Ponzi

scheme• punishments ranged from pay reductions and

suspensions to simple "counseling memos" • A 2009 report from the SEC inspector general called

into question the performance of 21 agency staffers in their handling of the Madoff case

• 10 are no longer with the agency and not subject to discipline

• Of the remaining employees, 9 were ultimately singled out for punishment, though 1 elected to

resign• Among the rest, one received a 6% pay reduction• Others received suspensions w/o pay for between 3

and 30 days• Two received counseling memos

Do you think the punishments

were appropriate?

Dow: up 1.42% for the weekS&P 500: up .85%

NASDAQ: down .28%

References• http://static5.businessinsider.com/image/4defa60c4bd7c8ba241a0000-400-

300/mary-schapiro.jpg• http://www.ehow.com/about_4700550_characteristics-money-market-

funds.html• http://www.ft.com/intl/cms/s/0/bee8b3f4-0973-11e1-a2bb-

00144feabdc0.html#axzz1dQwEWnli• http://finance.yahoo.com/news/federal-govt-runs-98-5b-190255977.html• http://abcnews.go.com/US/wireStory/unemployment-aid-hits-month-low-

trade-gap-falls-1492324 5#.TsAAgfQUqsq• http://finance.yahoo.com/news/france-lashes-ps-shocking-error-

114913274.html• http://finance.yahoo.com/news/sec-disciplines-employees-over-madoff-

230100954.html• http://finance.yahoo.com/q/bc?s=%5EDJI&t=5d&l=on&z=l&q=l&c=