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

1. Financial News Brief Nov. 7th – Nov. 11th 2011 By: Joanna Alexander Kathy Ratajczak Will Prout Courtney Potter

2. 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 money What 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 cash Is what the SEC proposing beneficial?

3. 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.

4. Tuesday November 8, 2011 Election Day!Did You Vote??? Do you think a Republican or Democratic victory effects the stock market differently?

5. 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

6. 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!

7. 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

8. How do you feel about Government Spending?

9. 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

10. 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

11. 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, 9were ultimately singled out for punishment, though 1elected to resign • Among the rest, one received a 6% pay reduction • Others received suspensions w/o pay for between 3and 30 days • Two received counseling memos

12. Do you think the punishments were appropriate?

13. Dow: up 1.42% for the week S&P 500: up .85% NASDAQ: down .28%

14. 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=