• Fed considers sweeping rules to regulate pay at banks (NY Times)
• US Judge rejects $33 million deal settlement over Merrill Lynch Bonuses (NY Times)
• Bernanke said that the worst U.S. recession since the Great Depression was probably over (Reuters)
• US producer price inflation in August spiked 1.7% after dropping 0.9% in July (Bloomberg)
• US retail sales increased 2.7% in August. Consensus only expected an increase of 1.9% (Briefing.com)
• European Commission: deficit-to-GDP ratio could be higher than the previous 6% estimate (Eurointelligence)
• Germany issued a $4bn bond denominated in US Dollars, only the second time in history (FT)
• European Central Bank nets €900m from crisis lending (FT)
Whether Americans will go down the path of socialism, revert to a pure capitalist society or whether the US will remain in its current hybrid form, we should heed the famous phrase from George Orwell's Animal Farm: "All animals are equal, but some are more equal than others"."Insider trading is among the biggest of big-time no-no's. If you know something not everybody else does, you just aren't allowed to act on it. Corporate executives know there are laws against it. But there's nothing that says that lawmakers can't act on inside information they get just by doing their jobs."
US Senators' average annual stock performance beat the market average by approximately 12.3%, while stock purchases made by corporate insiders on average outperform the market by 7.4% and stock portfolios of the average US household underperform the market by 1.5%.
“The important thing for investors to understand is that leveraged and inverse ETFs reset on a daily basis,” says John Gannon, Finra senior vice-president for investor education. “If they hold them for longer than a day, they are unlikely to see the return they expected.” He gave an example of a leveraged ETF that tracks the S&P 500. Some investors believe that if the S&P 500 is up 10 per cent for the year, the leveraged ETF will return 20 per cent. “That is not the case,” says Mr Gannon. “These funds only double the daily return.”
Of the 767 ETFs trading in the US, 127 are leveraged and/or inverse, according to Morningstar. The funds have seen nearly $9bn in flows this year on a net basis while daily trading volumes average “hundreds of millions of shares each day”, Mr Sapir says. “This tells us that the funds are viewed by many as a useful part of portfolios for certain investment strategies.”
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