Daily Content For Financial Risk Managers http://www.riskcenter.com/ daily 1 2000-01-01T12:00+00:00 The Silicon Valley Venture Capitalist Confidence Index® for the fourth quarter of 2011, based on a December 2011 survey of 30 San Francisco Bay Area venture capitalists, registered 3.27 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence). This quarter's index fell from the previous quarter's reading of 3.41 and marks the third consecutive quarterly decline in the eight-year running research report. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913528 2012-02-03T08:00+00:00 Anne-Marie Devine Executives at U.S. middle market energy companies are bullish on their outlook for 2012. This optimism among executives is fueling growth, as 85% expect to seek financing this year, according to Mike Lorusso, Group Head of CIT Energy (cit.com/energy). These are some of the findings detailed in CIT's latest research study, “2012 U.S. Energy Sector Outlook” (cit.com/energyoutlook). With many companies looking to expand or refinance in 2012, the outlook for new job growth in the energy sector is positive, says Lorusso. “Such spending should create significantly more jobs in 2012 throughout the U.S., especially in the Northeast and Great Plains regions, which are seeing high levels of industry investment.” Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913527 2012-02-03T08:00+00:00 Matt Klein As green building practices become more commonplace in the global construction industry, the goal of designing zero energy buildings, or buildings that consume as much energy as they produce through on-site and renewable energy systems, has emerged as the next major frontier. A number of countries and regions have already established long-term targets and regulations requiring zero energy building construction that will come into effect over the coming years, some as soon as 2016. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913526 2012-02-03T08:00+00:00 Richard Martin Two out of three (66 percent) consumers switched companies - including wireless phone, cable and utilities - as a result of poor customer service in 2011 even as their satisfaction with the services provided by those companies rose, according to new research released by Accenture (NYSE: ACN). The research findings pose new challenges for marketers as they focus on building customer loyalty and improving market share in a very competitive business environment. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913525 2012-02-03T08:00+00:00 Ryan Wells Micro-hybrids will grow nearly eight-fold to 39 million vehicles in 2017 and create a $6.9 billion market for energy storage devices as the fuel-saving alternative technology finds ready adoption, driven by stricter emission standards, according to a Lux Research report titled, “Every Last Drop: Micro- And Mild Hybrids Drive a Huge Market for Fuel-Efficient Vehicles.” Micro-hybrids, which use a small battery to provide varying degrees of efficiency-boosting features, will dominate the automotive market, gaining 42% of the overall light-duty vehicle market. Simultaneously, the mild hybrids — superior to micro-hybrids but not as efficient as pure hybrids — will rise from near-zero to 1.5 million vehicles in 2017, accounting for 1.6% of the auto market. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913524 2012-02-03T08:00+00:00 Carole Jacques SMBC Nikko Securities is quickly emerging as a powerhouse in Japanese fixed-income trading, according to the results of Greenwich Associates 2011 Japanese Fixed-Income Investors Study. From 2010 to 2011 SMBC Nikko Securities increased its market share in Japanese government bond trading to 7.8% from just 3.0% and its share in secondary yen investment-grade credit bond trading to 16.6% from 10.1%. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913523 2012-02-02T08:00+00:00 Joan Weber Kamakura Corporation reported Wednesday that the Kamakura index of troubled public companies declined, rising 0.77% to 7.27% in January. The index has deteriorated in seven of the last nine months. The index hit an intra-month high of 8.74% on January 9 having risen from an intra-month low of 6.98% on January 2. Seasonal factors drive part of the deterioration in the index during the month. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913522 2012-02-02T08:00+00:00 Martin Zorn The OTC derivatives market knows that 2012 will be a transformational year for the industry. By year-end, the industry has to meet the challenging objective, laid out by the G-20, of trading all “standardized” derivatives transactions on electronic platforms, where appropriate, and clearing them through central counterparties (CCPs). Increasingly, this task is looking extremely ambitious. ISDA made its views known in a letter to the European rule-making bodies. Market participants and regulators need time to think through the issues and prepare solutions to the challenges posed. Rushing through them can only lead to increased risks and unintended consequences. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913521 2012-02-02T08:00+00:00 ISDA Staff The U.S. corporate bond market's rating drift turned more negative in the last quarter of 2011, following a similar but less severe trend in the third quarter, according to a new Fitch Ratings report. Downgrades affected 5% of outstanding bonds, the highest tally for a single quarter since 2009. In the first six months of 2011, downgrades moved 1.1% of market volume and lagged upgrades of 3.9%. The second half of the year proved more turbulent as downgrades affected 7% of issues and upgrades 1.9%. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913520 2012-02-02T08:00+00:00 Brian Bertsch Results for the fourth quarter of 2011 (4Q'11) at the largest U.S. banks fell (on average), reflecting several large one-time items taken during the quarter, according to Fitch Ratings. Spread income and margins were fairly flat given continued improvement in funding costs, while non-interest income was hampered due to the implementation of the Durbin Amendment, limiting debit interchange income. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913519 2012-02-02T08:00+00:00 Brian Bertsch If Americans think Congress is at at impasse now, just wait until lawmakers return to tackling the disposal of nuclear waste. That's pretty much what a commission appointed by President Obama has said. After two years, the Blue Ribbon Commission on America's Nuclear Future just came out with its final report to the U.S. Energy Department as to what to do with nuclear waste. That radioactive material is a hot potato and one that needs needs to find a permanent home or a way in which it can reprocessed and re-used. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913518 2012-02-02T08:00+00:00 Ken Silverstein In the wake of the financial crisis, three-quarters of the world's CEOs say more emphasis should be placed on measuring the value of non-financial assets such as intellectual capital and customer relationships to drive long-term performance, according to research from the American Institute of CPAs and Chartered Institute of Management Accountants. But just 51 percent of nearly 300 CEOs surveyed in 21 countries say their organizations currently measure the value of non-financial assets well or very well. And only 12 percent now turn to their finance teams for help with the task. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913517 2012-02-01T08:00+00:00 Jonathan B. Cox The Bank for International Settlements (BIS) and the Bank of Japan (BOJ) jointly organised a high-level seminar on "The development of regional capital markets" in Yokohama, Japan, on 21-22 November 2011. The seminar brought together senior officials of 12 central banks in Asia and the Pacific, the European Central Bank, the Bank of Mexico, the Bank of England and the Federal Reserve Bank of New York, as well as an academic and a private sector participant. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913516 2012-02-01T08:00+00:00 BIS Staff The Conference Board's measure of US consumer confidence fell to 61.1 in January 2012 from the upwardly revised 64.8 reading seen in December 2011 (initially reported as 64.5) that had represented the measure's highest level since April. The deterioration in consumer sentiment in January comes as a surprise as market expectations were for an increase to 68.0. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913515 2012-02-01T08:00+00:00 RBC Financial Group Economics Department The property price statistics bring together data from different countries. The BIS, with the assistance of its member central banks, 1 has obtained approval of various national data providers to disseminate the statistics as long as the national sources are clearly indicated. The sources and any relevant disclaimers are listed separately (sources of data). Copyright in these data must be honoured. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913514 2012-02-01T08:00+00:00 BIS Staff November 2011 GDP was disappointingly weak dropping 0.1% in the month following unchanged activity in October. During the third quarter of 2011, monthly activity rose 0.3% on average. Expectations were for a monthly gain of 0.2%. The weakness in November was concentrated on the goods-producing side of the economy, which fell 0.6%. A large component of this decline reflected further maintenance shutdowns in the petroleum sector although natural gas extraction was down as well in the month. Output among service-producing industries rose a minimal 0.1% in the month. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913513 2012-02-01T08:00+00:00 RBC Financial Group Economics Department President Obama is saying that his administration will open up more than three-quarters of the potential offshore oil and gas resources to development, prompting friends and foes alike to accuse him of having political motives. And while the White House has long said it would configure a comprehensive offshore energy policy, the timing could not be more conspicuous given his recent rejection of the Keystone XL pipeline. The president, though, says that he is committed to increased oil and gas production but only if it can proven safe. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913512 2012-02-01T08:00+00:00 Ken Silverstein Fiserv, Inc. yesterday released an analysis of home price trends in more than 380 U.S. markets based on the Fiserv Case-Shiller Indexes®. The indexes are owned and generated by Fiserv, a leading global provider of financial services technology solutions, and data from the Federal Housing Finance Agency (FHFA). The double-dip in home prices that began two years ago continued to take home prices lower through the third quarter of 2011, during which the average price of a U.S. single-family home fell to a new post-bubble low, declining 3.9 percent compared to the year-ago period. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913511 2012-01-31T08:00+00:00 RiskCenter Staff December 2011 personal consumer expenditure (PCE) was marginally weaker than expected in showing no change in the month relative to expectations of a 0.1% gain. This result followed unrevised increases in both November and October of 0.1%. Unchanged consumer spending in December reflected a 0.2% gain in the services component being fully offset by 0.4% declines in both the durables and non-durables components. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913510 2012-01-31T08:00+00:00 RBC Financial Group Economics Department In most workplaces, the notion of the employer asking an employee to take a lie detector test would probably elicit a degree of shock and horror. But there are circumstances under which an employer may legally request that a staff member undergo a polygraph examination. These circumstances were put to the test in Cummings v. Washington Mutual, a case heard by the U.S. Court of Appeals for the Eleventh Circuit. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913509 2012-01-31T08:00+00:00 Joel J. Greenwald, ESQ The April 2010 Deepwater Horizon drilling rig explosion and resulting oil spill in the Gulf of Mexico were the key drivers in the 5.1% increase in U.S. tort costs in 2010, according to the 2011 Update on U.S. Tort Cost Trends from global professional services company Towers Watson. Absent the costs from that event, tort costs would have shown an overall decrease of 2.4% for the year, the findings indicated. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913508 2012-01-31T08:00+00:00 Michael McNamara Global institutional pension fund assets in the 13 major markets grew by 4% during 2011 to reach a new high of US$28 trillion, up from US$26 trillion in 2010 according to Towers Watson's Global Pension Assets Study released today. The growth is the continuation of a trend which started in 2009 when assets grew 17%, and in sharp contrast to a 21% fall during 2008 which took assets back to 2006 levels. Global pension fund assets have now grown at over 6% on average annually (in USD) since 2001, when they were valued at US$15 trillion. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913507 2012-01-31T08:00+00:00 Ed Emerman An economic analysis prepared by The Brattle Group and released yesterday finds that a 100% tariff on imported solar PV cells and modules from China would result in as many as 50,000 net lost jobs in the U.S. over the next three years. Furthermore, retaliatory tariffs placed on U.S. exports of polysilicon to China would put nearly 11,000 more American jobs at risk in the first year following tariff imposition. According to The Brattle Group¡¯s analysis, the imposition of tariffs will ¡°slow the growth in domestic demand for photovoltaic systems by homeowners, commercial establishments and power producers, resulting in substantial job losses.¡± Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913506 2012-01-31T08:00+00:00 Ed Rothschild Innovation in the electricity market does not occur as it would in other markets. For starters, most areas of the country are served by monopoly providers. This means there is very little incentive to seek new ways to create electricity. Secondly, most providers are heavily regulated, often compounding risk-reluctant utilities with risk-averse regulators. In fact, according to a recent report from the American Energy Innovation Council, electric utilities spend a paltry 0.1 percent of their revenue on research and development, far below the U.S. industrial average. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913505 2012-01-31T08:00+00:00 Matt Baker As the world becomes more dependent on technology, and as trade borders become seamless, how can boards acquire the tools and skills necessary to be effective and relevant in the global market? In a time of great change, shouldn't the boardroom transform its internal composition and address the changes that are occurring globally? One of the board's responsibilities is to assess, validate and oversee the company's strategy. It has the fiduciary duty to provide the oversight, governance and platform for the company to build a successful global presence that will stand the test of change and still be on target, on budget and on time. Without the expertise in international business, how can boards today anticipate change in global decision making and execution? Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913504 2012-01-30T08:00+00:00 Mona Pearl Kamakura Corporation reported last week that it is releasing an important new research paper by Managing Director for Research Prof. Robert A. Jarrow entitled "Problems with Using CDS to Infer Default Probabilities." The popular financial press frequently quotes default probabilities for a specific firm on the basis of a credit default swap spread that may be based solely on dealer indications, not traded prices. Leaving the issue of illiquidity aside and using an analogy to life insurance, Professor Jarrow shows that frequently used formulas for converting credit default swap spreads to implied default probabilities are riddled with errors and therefore highly inaccurate. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913503 2012-01-30T08:00+00:00 Martin Zorn The advance estimate of US fourth-quarter 2011 GDP growth was 2.8%, which was up from 1.8% and 1.3% increases in the third and second quarters, respectively, although slightly below market expectations for a 3.0% increase. The main contributor to the acceleration in growth in the fourth quarter of 2011 was a sizeable 1.9 percentage point addition from inventories that more than reversed a 1.4 percentage point drag in the third quarter of 2011. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913502 2012-01-30T08:00+00:00 RBC Financial Group Economics Department Corporate America's highest-performing sales managers spend more time on selling activities compared with their lower-performing colleagues. However, a new survey by global professional services company Towers Watson suggests the difference between successful and unsuccessful sales manager is more a function of how they allocate their selling time among various activities and audiences. Additionally, high-performing sales managers tend to devote less time to administrative activities and avoid non-sales activities. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913501 2012-01-30T08:00+00:00 Binoli Savani The Financial Services Authority (FSA) last week proposed a number of changes to the Listing Rules that set out the requirements for companies listed in the UK. The changes are updates to the rules to take account of market developments. The Listing Rules are the responsibility of the United Kingdom Listing Authority (UKLA), operating under the FSA. The Consultation Paper (CP) also sets out some wider issues in relation to the premium listing standard on which comment is sought. Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913500 2012-01-30T08:00+00:00 FSA Staff Standard & Poor's Ratings Services said in a report that credit quality for the U.S. oil and gas sector should remain relatively stable in 2012. The industry economic and ratings outlook is titled "Robust Oil Prices Keep U.S. Oil And Gas Sector Largely Stable." "U.S. oil and gas companies should stay relatively stable this year, despite a tepid economic recovery and our expectation for very weak natural gas prices," said Standard & Poor's credit analyst Thomas Watters. "Supporting our credit outlook is our view that oil prices will remain healthy." Click on headline to get more of the story on RiskCenter.com http://www.riskcenter.com/story.php?id=99913499 2012-01-30T08:00+00:00 Mimi Barker