Euro Zone factory data indicates new Recession
Euro zone manufacturing data released today reflected the worst performance since the depths of the Great Recession, according to CNBC. The PMI for the Euro zone rose to 46.1 in September, up fro 45.1 in August and above the preliminary reading of 46.0. This was the 14th month below the 50 mark that divides growth from contraction. Euro zone unemployment remains at 11.4 percent. The indicator for new orders fell to its lowest number of 43.5. Experts indicate that France’s situation dropped the most, causing new worries for another Euro zone country. Despite the negative data, European markets are up on Monday and Asian markets were also primarily positive. The Dow was down 48 points on Friday, ending at 13,437.
New Trading Safeguards to be Implemented
US stock market operators and major brokers proposed on Friday that exchanges could develop new controls to shut off a financial firm’s trading if its positions grow too large, according to the Wall Street Journal. The suggestions came in response to the August 1 trading errors that nearly shut down Knight Capital Group, a chief handler of domestic share trading. Faulty trading software at Knight led the firm to mistakenly trade millions of shares before the error was stopped. Knight suffered a $440 million loss and damaged the confidence of all investors due to glitches in the fast moving automated systems that underlie the market. The new concept is in essence a “kill” switch that will shut down a firm should it run up against its exposure limit. A meeting will be held with the SEC on October 2nd with the operations and technology experts at major firms to discuss the concept.
Financial Services Oversight Committee meets to identify non-banks that cause systemic risk
On Friday, key members of the Financial Services Oversight Committee or FSOC met to identify firms that, even though they are non-banks, provide systemic risk and thus should be subject to the same oversight as banks. According to the American Banker, the firms will be notified prior to publishing a list for the public. Experts speculate that AIG and GE Capital, both firms allegedly once again facing challenges, will be on the list. Because of their size, MetLife and Prudential are assumed to be on the list.The nonbank firm must hold at least $50 billion of global consolidated assets and have $20 billion in debt outstanding or $30 billion in gross notional credit default swap outstanding.
Peaceful austerity protests in Paris
Thousands of demonstrators (about 80,000) marched peacefully Sunday in Paris to denounce austerity measures in the other EU countries, as reported by the Associated Press. On Friday, the French government presented a budget that included high taxes on the wealthy, but according to experts, fails to fundamentally reform the French budgetary issues.
Chinese wind farm group to sue Obama
The Financial Times is reporting that a Chinese-owned company that has been blocked from building wind farms near a US navy test site in Oregon plans to sue President Obama arguing that blocking the project is unconstitutional. The company, named Ralli, believes its constitutional rights to property ownership and legal process have been violated and it is demanding the order be overturned or that compensation be paid. The administration indicates that the investment has been blocked due to national security concerns.
Fewer business graduates go to Wall Street
The Wharton School of Business, known as the “conveyor belt of Wall Street”, sent 16.6 percent of its graduating MBA class to Wall Street in 2011 compared to 25 percent in 2008. According to the Financial Times, many graduates still go to Wall Street but in different types of jobs. For example, Goldman Sachs no longer runs a training program but still hires graduates on an open ended basis. Morgan Stanley said it is still committed to its training program but has a duty to appropriately train. Schools indicate that more individuals are going to private equity and hedge fund roles. MBA graduates that do go to Wall Street generally earn $90,000-100,000 with a similar bonus on top of that.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.