A pro-rescue party won a narrow victory in Greece's parliamentary election, heading off a confrontation with the EU regarding terms of the country's financial bailout. The New Democracy party, with the most votes in early estimates, is expected to form a coalition government with the Panhellenic Socialist Movement party, which came in third. 

European leaders are expected to face pressure at G-20 summit

European leaders will head to a Group of 20 summit this week in Mexico amid mounting pressure to resolve the sovereign-debt crisis. Greece's election eased immediate risk that the eurozone will break up, but politicians, market participants and others worldwide have indicated growing exasperation with Europe's crisis-fighting efforts.

Socialists win a clear majority in France's National Assembly

The party of France's newly elected President Francois Hollande won an absolute majority in the lower house of parliament. The Socialists got 314 votes in the National Assembly, compared with the conservative Union for a Popular Movement's 191, according to exit polls. The left already controls the Senate. 

Rolet works quickly to transform and update LSE Group

London Stock Exchange Group is at a critical juncture as financial regulation is changed worldwide. Xavier Rolet, who became CEO in May 2009, has been striving to ensure the company changes with the times. "We had to get the house in order, and the three things we were determined to do immediately were sort out the technology, repair relations with clients and cut the cost base," he said. Such efforts were only the beginning of realizing Xavier's long-term vision for the company.

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Market Activity


Greek election results touch off rally on most Asian-Pacific markets

Most Asian-Pacific share markets surged Monday after a pro-bailout party in Greece won the most votes in a parliamentary election. South Korea's Kospi, Japan's Nikkei 225 and Taiwan's Taiex each rose 1.8%. Australia's S&P/ASX 200 gained 2%. Hong Kong's Hang Seng Index added 1%. China's Shanghai Composite moved up 0.4%. Bucking the trend, India's Sensex was down 1.5% in the afternoon.

Fed signals possible move toward "risk management" strategy

With the outlook for the U.S. economy muddied by often contradictory data, the Federal Reserve is expected to move toward the "risk management" strategy of containing high-cost threats that was first put into use by former Chairman Alan Greenspan. Vice Chairwoman Janet Yellen and William Dudley, who heads the Federal Reserve Bank of New York, have used the phrase recently. 

FX investors adopt fresh strategies amid volatility

Currency-market investors are forced to try different strategies as central banks cut interest rates and continue easing monetary policy. Record Currency Management, a specialist foreign exchange investment firm, closed its Pooled Plus fund after incurring heavy losses and opened the Euro Stress fund to capitalize on volatility in the eurozone. Insch Capital Management, a Swiss hedge fund manager, also changed its money-management algorithm for trading forex strategies.

Economics

U.S. industrial production unexpectedly fell in May

The output of U.S. factories, mines and utilities posted an unexpected decline of 0.1% in May, on the heels of a 1% increase in April, the Federal Reserve said. Economists were expecting a 0.1% advance. 

Long-term deficits depress GDP by 24% for many years, study finds

A study by the National Bureau of Economic Research of government deficits and economic growth in several nations and over centuries found that persistent deficits are associated with a 24% reduction of gross domestic product that lasts for years. The authors warned that their paper isn't a call "for rapid public debt deleveraging in an environment of extremely weak growth and high unemployment."

Executive pay keeps getting more generous, report says

The amount U.S. companies pay executives remains controversial, but that isn't having much impact on the size of their pay packages, according to research by Equilar for The New York Times. The median compensation for the 200 highest-paid CEOs was $14.5 million last year, 5% more than 2010's amount, the compensation-data firm said.

Bond dealers are split over possible stimulus by the Fed

Twelve of the 21 primary dealers who trade with the Federal Reserve expect central bankers to announce fresh efforts to bolster the economy. The other large bond dealers expect the Fed to hold steady. Some market observers question whether such efforts would have much of an impact. "The bottom line is the Fed's activity would have limited effect, and there is a question of how much lower does the Fed want to drive rates," said Larry Dyer, an interest-rate strategist at HSBC Holdings. 

Analysis: Political uncertainty might be enoug`h to cut growth

Economists such as Ben Bernanke and John Maynard Keynes have long said that uncertainty about what policies governments plan to pursue hurts economic growth by discouraging investment. Researchers recently concluded that policy uncertainty in the U.S. between 2006 and 2011 cost the nation 2.3 million jobs and cut real gross domestic product by 3.2%. 

Geopolitical/Regulatory


EU, Japan and U.S. make progress on derivatives reform, FSB says

The Financial Stability Board prepared a report outlining progress toward implementing tougher rules for derivatives markets. The Group of 20 nations task force said regulators in Europe, Japan and the U.S. are making good progress, but there is a long way to go. "Broadly speaking, the jurisdictions currently with the largest markets in [over-the-counter] derivatives -- the EU, Japan and the U.S. -- are the most advanced in structuring their legislative and regulatory frameworks," according to the report. "They expect to have regulatory frameworks in place by end-2012 and practical implementation within their markets is well underway." 

Rules aim to lure more participants in China's QFII program

Regulations for China's Qualified Foreign Institutional Investor program are designed to speed up approval, ease requirements and expand investment areas. The steps are expected to pull in more investors to the mainland market and might "allow investors under the QFII scheme to invest in China's interbank bond market and start the securities margin trading and short-selling business," an official with the China Securities Regulatory Commission said. 

Financial advisers prefer SEC user fees over SRO, survey finds

A majority of financial advisers support letting the Securities and Exchange Commission impose user fees to pay for examination over shifting advisers' oversight to a self-regulatory organization, according to a survey by InvestmentNews. SEC user fees received support from 58.7% of survey participants. 

IOSCO advises developing countries about institutional investors

The International Organization of Securities Commissions released recommendations to help regulators and policymakers in emerging markets establish a strong base of institutional investors. IOSCO suggested that they create a multipillar pension system, develop a strong system to monitor markets and guarantee that foreign and domestic groups operate on a level playing field.

Financial Products


Db X-trackers introduces 8 ETFs investing in CDS indexes

Deutsche Bank's db X-trackers brought to the London Stock Exchange eight exchange-traded funds investing in credit default swaps indexes. The ETFs offer individual investors unleveraged or 200% leveraged long or short exposure to the Markit CDX North America High Yield and the Markit CDX North America Investment Grade CDS indexes.

Ethics

Wall Street should take Gupta's conviction as warning, ex-judge says

Successful use of wiretap and hearsay evidence to convict Rajat Gupta of insider trading is a warning to Wall Street, said former U.S. District Judge Richard Holwell, who made the first wiretap ruling in the case. People who share inside information can never be sure they won't someday hear their conversation played back to a jury, he said.