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Hold on to your hat. We may be headed for a double-dip recession. In fact, when more current economic data arrives a few months from now, it may turn out that we're already in one, according to a pair of economists at Moody's Capital Markets Research Group.

A majority, 63%, of middle-class Americans thinks that the U.S. is in a doubledip recession, the First Command Financial Behaviors Index shows, up from 50% who thought the U.S. had reverted back into recession last summer.

The goal of outsourcing: to reduce the operational costs, risks and even time involved with doing the work in-house.

The Securities and Exchange Commission in late July voted unanimously to require large trading firms to identify themselves, so their market activities can be tracked (see Money Management Executive, 8/1/11, page 4).

Taking Stock: Northern Trust, BlackRock Say Little ChangedPrinter Friendly Email Reprints Reader Comments Share | August 8, 2011Tom Steinert-ThrelkeldAs securities markets in the United States prepare to open widely lower Monday morning, Northern Trust and BlackRock each said that the decision by the Standard & Poor’s bond ratings agency to downgrade U.S. Treasury debt for the first time would not affect their views of the U.S. bond market or the solvency of the U.S. government.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.Chief Investment Officer Bob Browne said Northern Trust has no plans to sell U.S. Treasuries as a result of the downgrade.“Northern Trust does not see any fundamentally new information in the downgrade about the state of the U.S. economy and the country’s capacity to pay its debt,” said Browne.Using credit default swaps as a guide, U.S. beats Wal-Mart.Underscoring Mr. Browne’s position, Northern Trust’s Chief Investment Strategist, Jim McDonald, last week released a research commentary in which he analyzed the deal to raise the government debt ceiling and the political environment that created it. McDonald noted that U.S. fiscal problems, if left unaddressed, were likely to manifest themselves through a weaker dollar rather than higher bond yields. The U.S. government’s financial strength still remained higher than that of almost any other nation and of major corporations, including Wal-Mart (see chart).Northern Trust investment experts believe that growth and inflation expectations will determine U.S. bond yields over the next few years much more than the level of deficits.“Looking globally, S&P downgraded Japan to AA- in January of this year; that country's bond yields have declined since then and remain substantially below those of the United States," Browne said.With regard to money market funds, Browne noted that short-term ratings of the U.S. remain unchanged by S&P, remaining at A1+, the highest level. A Northern Trust report can be found here.BlackRock, in a statement, said the downgrade of U.S. sovereign credit by S&P“reflects facts that have been well known to the market for some time. So, it does not imply a fundamental increase in risk, and we don’t believe that investors should change their behavior based solely on the downgrade. However, in combination with continued economic weakness and regulatory uncertainty, this may provide a signal to some investors to reassess their risk appetite.”BlackRock said it had been preparing for the possibility of downgrade over the past month, and, the firm has no need to execute any “forced selling of securities” in response to the S&P downgrade.BlackRock said it also is prepared for “continued downgrades into next week of the many other issuers and issues that derive their rating from the U.S. government rating – including governmental entities and corporate issues.Weakness in labor markets, when combined with only modest levels of growth, argues for a high likelihood that the Federal Reserve will maintain its Fed Funds policy range at historically accommodative levels for at least another year and perhaps through 2012, BlackRock said.BlackRock said:Nonetheless, we think it is vital to underscore the fact that the U.S. Treasury sector remains the largest and most liquid fixed income market in the world with the greatest degree of price transparency and few genuine alternatives.As securities markets in the United States prepare to open widely lower Monday morning, Northern Trust and BlackRock each said that the decision by the Standard & Poor’s bond ratings agency to downgrade U.S. Treasury debt for the first time would not affect their views of the U.S. bond market or the solvency of the U.S. government.

Consumer confidence, as measured by the Discover U.S. Spending Monitor, fell for the second straight month in July, to its lowest level in two years. Since January, the monitor, based on a daily poll of 8,200 consumers, has dropped 11 points, to 82.7.

Envestnet’s platform services agreement with FundQuest 18 months ago has gone well, apparently.

Even though the government reached an agreement to raise the debt ceiling, 54% of Americans surveyed said the debate over the debt ceiling has made them feel less confident in the economy, the RBC Consumer Outlook Index for August found.

DST Systems Reviews Strategic OptionsAugust 5, 2011Chris KentourisAfter insisting it wants to stay independent, DST Systems on Friday came close to confirming it was on the block.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.Last month, DST said it was not entertaining discussions with any party regarding a sale of the company and didn’t think its stock price was representative of its long-term intrinsic value. Therefore, it couldn’t entertain a takeover.But on Friday, the Kansas City, Mo. based firm which provides recordkeeping and other services to mutual funds and broker-dealers, said that it hired Bank of America Merrill Lynch and law firm Skadden, Arps, Slate, Meagher & Flom LLP to advise its board. Stinson Morrison Hecker LLP is providing legal advice.“The board of directors of DST Systems, Inc continuing its long standing practice of engaging in an ongoing review of the Company’s business plan, assets and investment portfolio,” said DST in a statement on Friday.In that same statement, DST also confirmed that it rejected a bid from Russell Glass, the founder of RDG Capital LLC, that he and two other people be added to its board. Glass said in June he made a bid to buy DST.DST’s stock dropped $2.92 a share or six percent to $45.91a share on Thursday giving the firm a market value of $2.1 billion.DST’s news on Friday followed a dismal second quarter earnings report; second quarter earnings fell 41 percent to $55.2 million from the year earlier period due to a large payment the firm received when a customer dropped its contract last year.The 2010 figure included a $58 percent termination payment. Eliminating the payment from earnings, DST’s earnings declined 14 percent to $49.4 million from $57.6 million the year earlier in large part due to a decline in the number of registered accounts it handles. Revenues declined 9 percent in the 2011 second quarter to $424.1 million.After insisting it wants to stay independent, DST Systems on Friday came close to confirming it was on the block.

International Funds Set to Outpace Domestic Counterparts: S&PBy Dave LindorffAugust 4, 20112011 has not been a great year for international equity mutual funds, especially compared to domestic U.S. fund counterparts. But this situation could very well change and investors in the near future, according to analysts at Standard & Poor's Equity Research.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.First the numbers.After having two great years, in the first half of 2011 through the end of June, the average gain for international equity funds was a paltry 1.7%. This compared to an average gain of 3.4% for funds invested exclusively in U.S. domestic stocks.But Alec Young, an S&P international equity strategist, and colleague Todd Rosenbluth, an S&P mutual fund analyst, said that a slowing U.S. economy going forward could make it hard for domestic-invested funds to continue outperforming international funds -- especially if the dollar continues its slide against the Euro and other currencies (it’s down 7% so far this year).As Young explains, international funds that invest in companies that denominate their overseas returns in local currencies see their returns rise when those overseas earnings in foreign currencies get converted to dollars.Even so, he said that for international stocks and international mutual funds to really take off in the second half would require a convergence of a number of factors, not all of which are looking particularly likely.These factors, he said, would include an easing of sovereign debt “stress,” greater momentum in international manufacturing, commodity price stabilization, and a more robust U.S. recovery. With both the U.S. and global economies looking weaker, Young told On Wall Street that there were “still two things that could happen that would help international equities funds: a QE3 program by the Federal Reserve, or an expansion of the European Economic Stability Fund.” The Fed at the end of June ended its latest quantitative easing program, called QE2, of buying Treasuries and, at that time, Fed Chairman Ben Bernanke said he did not anticipate having the Fed engage in a third such program.But some economists and Fed watchers think that the dramatic change in the outlook of the U.S. economy evident in recent days may make him rethink that view. Also, there are many experts in Europe who think that the economic stability fund established to prop up the economies of Greece, Portugal and other weaker Euro Zone states is too small and may need to augmented. Looking at the universe of international funds available to investors, S&P’s analysts are recommending three which they say are both top performers and which are invested in companies with strong credit profiles and/or a history of earnings and dividend stability. They include:-- Lazard International Equity Portfolio fund (LZIOX), a relatively small fund with only $38 million in assets that has returned 5.8% so far in 2011 with below average volatility.-- Templeton Foreign Fund (TEMFX), up 5.3% this year, and a fund with relatively low turnover.-- MFS Research International Fund (MRSAX), up 5.1% this year, and a fund that has outperformed its peers for the past five calendar years.

Fund companies are insurers tend to entrust their wholesalers to manage their business independently, according to a Kasina study. In fact, 60% of asset managers fail to provide them with the tools, training or compensation tied to profitability, Kasina says.

Keating Capital, a pre-IPO fund, concluded its public offering, raising $86.8 million. Next, the fund plans to list its stock on Nasdaq by the end of the year.

PIMCO's Gates: Even After Debt Deal, Bigger Issues Still Haunt U.S. EconomyBy Dave LindorffAugust 3, 2011Don’t count Bill Gross, managing director of the giant investment management firm PIMCO, among those expressing relief at the government’s recent debt ceiling compromise or any subsequent package of budget cuts that may materialize over the next 10 years.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.Gross, whose company manages more than $1 trillion in assets, said the deal -- which he characterized as a display of “dysfunctional government -- scarcely touches the current year’s $1.5 trillion deficit.Worse yet, he said that even if the scheme to have 12 members of a “super committee” of six House and Senate Republicans and six House and Senate Democrats does manage to come up by with another $1.5 trillion worth of budget cuts over the next decade, it would only reduce future deficits “at most by 0.5%”The cuts made in the debt deal are predicted by the Congressional Office of Management and Budget to bring down the country’s “official” total debt/GDP ratio from a current level of 100% to around 90%, with the deficits in 2012 and 2013 averaging 7% to 8% of GDP each year.But that drop in the debt/GDP ratio, Gross warns, is premised on an assumption that the U.S. economy will grow in 2012 and 2013 at a rate in excess of 3% per year.But as Gross said, “Recent trends give pause to these estimates, as does PIMCO’s New Normal, which believes 2%, not 3%, is closer to reality.”The bad news: If growth is closer to 2% per year instead of 3%, “deficits move right back up to near double-digit percentages of GDP.”And there’s another catch.The rosier scenario for the debt/GDP ratio assumes interest rates hold at current 2% levels. If rates were to rise, either because of inflation or to defend a falling dollar, for example, Gross said every 100 basis point increase “raises the deficit by 1% and erases any hoped for gains.”The government’s action on the deficit this week pales almost to insignificance, Gross warns, when one looks at the net present cost of future liabilities in the Medicare, Social Security and Medicaid programs, which he puts at a staggering $66 trillion.These enormous future debts can be addressed, he said, but not without taking steps to improve the efficiency of our healthcare system, reduce benefits, raise retirement ages, and, yes, increase tax rates, “or a combination of all of the above.” Gross said the government also has the option of depreciating the currency and/or maintaining artificially low or even negative real interest rates.Not a pretty picture to be sure.Gross’s advice to investors: favor countries with higher real interest rates like Canada, Mexico, Brazil and Germany. Diversify equity and fixed income investments out of the dollar and into developing nations “with stronger growth prospects. He also advocates investors buy commodity-based real assets “before reserve surplus nations do,” and “above all, don’t be lulled to sleep by congressional law makers that promise a change in Washington.” Don’t count Bill Gross, managing director of the giant investment management firm PIMCO, among those expressing relief at the government’s recent debt ceiling compromise or any subsequent package of budget cuts that may materialize over the next 10 years.

Long-term mutual funds were hit with -$10.381 billion in redemptions the week ended July 27, the Investment Company Institute said. This came on the heels of -$4.58 billion in redemptions the previous week.

Appeals Court Ruling Likely to Delay Dodd-Frank RegsBy Donna Borak, American BankerAugust 3, 2011WASHINGTON — A recent federal appeals court decision is likely to cause the delay of dozens of pending Dodd-Frank Act regulations.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 U. S. Court of Appeals for D.C. Circuit Court ruled July 22 that the Securities and Exchange Commission did not properly conduct a cost-benefit analysis before finalizing a proxy rule required by the regulatory reform law.The decision serves as a stark warning for all federal regulators tasked with writing the myriad of regulations under Dodd-Frank, and gives the industry and others more leeway to challenge new rules in court. As a result, industry observers said regulators are likely to take more time to ensure they can adequately justify their decisions."The entire Dodd-Frank implementation is at heavy risk because if any of these rules are challenged by the courts, they won't survive," said Hal Scott, Nomura Professor and Director of the Program on International Financial Systems at Harvard Law School.Rules put out by other federal agencies will be "completely attackable under this decision," Scott said.Republicans, who opposed Dodd-Frank and have sought to push back many of its regulations, immediately seized on the ruling, arguing it proved their fears that the new rules would be costly and burdensome to banks and the economy at large."Our regulatory agencies are not undertaking rigorous and deliberate analysis to understand the economic impacts of their actions," said Sen. Richard Shelby, ranking member of the Senate Banking Committee, following the court's decision. "The decision is an unequivocal validation of the concerns that Republicans have raised repeatedly over the past year."At issue is a case brought by the U.S. Chamber of Commerce and Business Roundtable, which claimed the SEC didn't take into account the full costs associated with a new proxy rule. In its decision, Justice Douglas Ginsburg agreed with the industry, saying the SEC had acted "arbitrarily and capriciously" in failing to adequately assess the economic effect of the rule.Ginsburg also said the SEC had "inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters."This was not the first time the SEC has lost a case on the same grounds. Unlike other agencies, it is required to show a rule's effect on efficiency, competition and capital formation. "It's a black eye not just for Dodd-Frank, but it's a black eye for the SEC," said Cornelius Hurley, director of the Center for Banking and Financial Law at Boston University.But the impact is likely to go well beyond the SEC. Industry representatives said the banking agencies will be more cautious now as they develop proposals."The immediate impact is that it puts the Dodd-Frank rulemaking under a sharper microscope," said Tom Quaadman, vice president of the Chamber of Commerce's Center for Capital Markets Competitiveness. "There's no question that there's going to be much heightened scrutiny."Randall Kroszner, a former Federal Reserve Board governor and now professor at the University of Chicago, agreed."It is the shot across the bow saying the cost benefit analysis needs to be something done well and should be front and center in assessing the impact of regulations," he said.It also provides Republicans with more ammunition in their battle against Dodd-Frank, giving them more opportunities to showcase the potential costs of the law."This is part of the war of attrition that the Republicans are waging against Dodd-Frank," said Hurley. "Unfortunately, Dodd-Frank is a deeply flawed statute, so they have a lot of opportunities to criticize. The way they are going to kill it is through court challenges and short funding the regulators."Sen. Mike Crapo, R-Ind., joined Shelby in calling the court decision a critical ruling."Regulators charged with implementing the hundreds of Dodd-Frank rules must take this decision as a wakeup call and take the necessary time to get the final rules right by incorporating the meaningful public comments and economic analysis in their proposed rules," Crapo said in a press release.Similarly, several top members of the House Financial Services Committee, including Rep. Scott Garrett of New Jersey, chairman of the capital markets subcommittee, Rep. Jeb Hensarling of Texas and Rep. Randy Neugebauer of Texas, wrote a letter raising concerns to SEC Chairman Mary Schapiro."The court's decision raises fundamental questions about the adequacy of the SEC's rulemaking pursuant to the Dodd-Frank Act and the Commission's exercise of its general rulewriting authority," they wrote in a letter dated July 28.In response to the decision, the SEC has said it is reviewing the case and considering its options.While no decision has been made yet, the agency has the ability to seek a panel rehearing or appeal to the Supreme Court. It could even opt to do nothing, or redo the entire rulemaking process from scratch.Still, the court decision appeared to validate concerns Republicans have raised since before the law was passed.Shelby along with all the Republican members of the Banking Committee urged regulators in a February letter to complete a thorough economic analysis of the hundreds of rules they are required to write under Dodd-Frank.Later, Shelby put more pressure on the issue asking the Inspector Generals for all the respective agencies to conduct a review. The reports found cases were regulators had not adequately conducted an economic analysis of a pending regulation.Observers said lawmakers will be ready to pounce on regulators should their analysis prove faulty or inadequate."I think once people understand the implication of this decision, there's going to be a lot of pressure on the agencies both from industry and the Congress," said Scott. "It's in everybody's interest to stop and take stock and do the kind of cost-benefit analysis that will be required for these rules to survive in the court." WASHINGTON — A recent federal appeals court decision is likely to cause the delay of dozens of pending Dodd-Frank Act regulations.

Approximately $13.2 billion flowed into exchange-traded prodcuts in July, according to statistics compiled electronically by National Stock Exchange.

Reversing a decision of a lower court. U.S. District Court for the Southern District of New York Judge Jed S. Rakoff is allowing a SEC lawsuit against Marc Gabelli, son of Mario Gabelli, to proceed.

According to Strategic Insight’s latest report, “Emerging Market Bridges: All Eyes on Asia and Latin America for Fund Managers and Private Banks,” local developed markets will continue to struggle for the foreseeable future, and investment professionals should look to the growth centers of Asia and Latin America to drive performance.

American Century has launched the American Century Global Real Estate Fund, managed by Steven Brown. He will be supported by analysts Steven Rodriguez and Vishal Govil.

The Defined Contribution Institutional Investment Association has issued a report calling on employers to limit leakage from 401(k) plans, “Plug the Drain: 401(k) Leakage and the Impact on Retirement.”