The Independent Market Observer

Yesterday’s News

Posted by Brad McMillan, CFA®, CFP®

Find me on:

This entry was posted on Jul 17, 2012 4:27:54 AM

and tagged Yesterday's News

Leave a comment

After a tough weekend and Monday for finance, we have a slow day. There are no articles of particularly new financial or economic interest on any of the front pages—nice to see that for a change.

There are a couple of themes though. In the business section of the New York Times (NYT), three articles highlight conflicts between regulators and financial companies. On the front page are “British Bank Fighting Bid for Data in Rate Case,” which is about the LIBOR scandal, and “Regulators and HSBC Are Faulted by Senate,” which discusses the money laundering scandal. On page 3 is “U. S. Consumer Bureau to Oversee Companies That Handle Credit Reports.” On page C1 of the Wall Street Journal (WSJ), you’ll see “Senate Probe Faults HSBC” and “Banker Accounts on LIBOR Conflict.” And on its front page, the Financial Times (FT) has “Regulator hits out at Diamond over Libor”—but that’s not really new.

The LIBOR and HSBC money laundering scandals continue to expand and to pull in the regulators. If there is a regulatory problem here, I don’t think that the governments will respond by regulating less or with a lighter hand. I think any flexibility or leniency shown to any of these banks will probably come back and bite the regulators—so don’t expect to see any such in the future.

It is not just the major financial institutions in the cross hairs either. On page B1 of the NYT is “Merchants Considering Credit Card Surcharges,” while on page 1 of the WSJ is “Goldman Builds Private Bank.” The world is definitely changing when cash starts to make a comeback—which it most likely will, in these frugal times, if it costs money to use a credit card—and when Goldman is looking to take deposits and make mortgage loans. This is just one more link in the process of downsizing and normalizing the financial sector, which even now has hardly begun.

One positive article of note is on page A12 of the NYT, “Universities Reshaping Education on the Web.” As I will be discussing in a future post, the financial model of higher education is broken and is not sustainable, and these websites represent the future. The one discussed in the article,, is worth a look. Another site,, is similar but very different. Finally, one of my alma maters, MIT, was the first to do this seriously, and its offering is This is the start of a solution to a problem that is a real burden to students and young people in general today.

Subscribe via Email

Crash-Test Investing

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®