Money Management Executive Latest News

Investors are taking money out of U.S. bond and stock mutual funds because of the increase in economic uncertainty in July, according to research released on Friday by Strategic Insight.

Mutual fund asset growth worldwide is expected to rise by a moderate 10% this year, according to Financial Research Corp. By comparison, the industry’s assets rose 16% in 2010.

Forty-two percent of workers are living paycheck to paycheck, down slightly from the 43% who were in this financial state in 2010, CareerBuilder found in a survey of 5,200 workers. This 42% level is at pre-recession levels, indicating that while incremental, household finances are improving.

The stock market may be reeling, the U.S. sovereign debt rating may have taken a hit from Standard & Poor’s and the Eurozone debt crisis may be worsening, but high-quality corporate bonds are looking like a great deal.

CFOs Expect Strong Earnings But Inflation Fears Abound: SurveyBy Larry BarrettAugust 10, 2011Chief financial officers in the U.S. and Europe are largely optimistic about sales and earnings for their individual companies through the rest of the year, but rising commodity prices and extreme volatility in the equities markets has most convinced inflation is on the rise and will likely hinder any substantial recovery in the overall economy.Like what you see? Click here to sign up for Financial Planning's daily newsletter to get the latest on advisor market trends, investment management, retirement planning, practice management, technology, compliance and new product development.The CFO Outlook survey, conducted last month by Financial Executives International and Baruch College’s Zicklin School of Business, interviewed 228 corporate CFOs based in the U.S., 78 corporate CFOs from Italy and 44 CFOs from France.The survey found that while U.S. CFOs are slightly more optimistic than their European counterparts, concerns about the impact of raising the debt ceiling and the possibility of a double-dip recession are prompting most to extend their forecasts for the start of a U.S. economic recovery by more than a year to the second half of 2012 or beyond. The second quarter CFO Optimism Index for the global economy experienced a decline for U.S. CFOs from the previous quarter (61.70 to 59.40 in Q2), but remained higher than European CFOs, which also dipped (58.90 to 55.10 in Q2). U.S. CFOs’ optimism in their own companies remained consistent with the previous quarter (72), and demonstrated a higher level of confidence in their businesses than did European CFOs (down to 63.20 from Q1’s 66.10). However, the confidence among U.S. CFOs in the U.S. economy weakened. The index dropped five points from the previous quarter (59.00 from Q1’s 64.10) and dropped below their optimism for the global economy. Over the next 12 months, U.S. CFOs are forecasting a 21% increase in their net earnings, an 11% increase in revenue and a 15% increase in capital spending, while CFOs in Europe anticipate more modest increases in revenue and net earnings (6% each) and only a 4% increase in capital spending."Globally, CFOs continue to display caution. Inflation concerns and fears about the recovery may further delay new hiring and investing," John Elliott, Dean of the Zicklin School of Business at Baruch College, said in the report. "While U.S. CFOs have high expectations for earnings growth and generally hold a more positive outlook than Europeans about the global economy and the future of their businesses, their declining confidence in the U.S. economy reflects uncertainly.""Decisions from Congressional leadership and the President will be especially significant for U.S. businesses in the coming months," he added.Mainly due to rising commodity prices, inflation levels continue to be a major area of concern for CFOs. When asked to rate their inflation concerns on a scale of one to five (with five being the highest level of concern), 70% of U.S. CFOs and 66% of European CFOs selected a three or higher. The report found that while more than half feel their level of concern was unchanged from last quarter, over a third of both U.S. CFOs (39%) and European CFOs (36%) expressed more concern this quarter.From a big-picture perspective, the survey discovered that because of these formidable macroeconomic obstacles, a relatively lower number of U.S. CFOs feel the U.S. is in the midst of, or drawing close to, a recovery. Twenty-seven percent of U.S. CFOs believe that a recovery has occurred, and more than half (55%) predict that a recovery will not take place until the second half of 2012 or beyond.For nearly half of U.S. CFOs (47%), a lowered U.S. unemployment rate was perceived to be the most telling indicator of an economic recovery, which is followed by a rising gross domestic product (GDP) (22%) and a rise in consumer spending (17%).

BNY Mellon to Cut 1,500, as Expenses Rise Faster than RevenuePrinter Friendly Email Reprints Reader Comments Share | August 10, 2011Tom Steinert-ThrelkeldBNY Mellon said Tuesday it planned to cut its work force by 3 percent or 1,500 positions, by year, as it sees expenses growing faster than revenue.Like what you see? Click here to sign up for Securities Technology Monitor's weekly newsletter to get the latest news and analysis that matters to the effective operation of capital markets.The cuts will come by year end, after a review by all businesses of the composition of its global workforce of 48,900, spokesman Kevin Heine said.The announcement of the cuts comes less than a month after the company posted solid earnings growth.The provider of asset servicing, issuer services, clearing services and other investment services reported second quarter net income of $735 million, up from $658 million a year ago and $625 million in the first quarter of 2011."Over recent quarters, BNY Mellon has succeeded in building positive revenue momentum. However, expenses have been growing unsustainably faster," said Robert P. Kelly, BNY Mellon chairman and chief executive officer.In the past year, revenue has grown 19.6 percent, to $3.1 billion in the second quarter of this year. But staff, professional, legal, software and other “noninterest” expenses have risen 21.2 percent (see chart).Jobs are not the only target for expense reductions. The company also expects to rationalize technology picked up in a series of acquisitions in recent years, most notably the $2.3 billion purchase of the Global Investment Servicing Business of PNC Financial Services Group.In the company’s second quarter earnings call last month, Chief Financial Officer Thomas Gibbons said:There is some low-lying fruit. I mean, if you think about it, we've gone through a number of acquisitions over the past 3 or 4 years. So when we go back and reflect on our technology infrastructure, there's quite a bit we can attack there. We've got too many desktop configurations just the nature of our business model, and we're going to go after that. We also have some applications dating back to the Mellon Bank of New York merger, which we think we can sunset too, and we also for the first time are really looking at combining some of our common operations not just within asset servicing, but even across some of our different businesses.BNY Mellon is not planning to offer any voluntary departure packages, Heine said. Instead the company will rely on “natural turnover” and an immediate hiring freeze to hit its job cuts target.The company also expects to reduce its use of temporary workers, consultants and contractors

WASHINGTON—Standard & Poor's downgrade of U.S. debt last week is likely to hasten the replacement of credit ratings within bank regulatory requirements.

Market volatility and an uneven path for the economic recovery are set to continue for years, according to Towers Watson. What’s more, all asset classes will face higher-than-average volatility, Towers Watson said.

Rather than offer the complete lineup of a target-date series in their 401(k) plan, sponsors are selecting only those funds that fit the age and demographics of their employees. This could result in under-funded target-date funds that could put the entire lineup in jeopardy, according to a new report, “Trends in Date-Date Portfolios on Recordkeeper Platforms,” from Financial Research Corp.

The August reading of the Consumer Reports Index fell to 43.3, its lowest level since December 2009. Falling 5.1 points from 48.5 in July, the index registered its sharpest drop in two years.