The New York Times writes "​The Best Savings Account Rates: An Ongoing Quest". It says, "​It'​s no secret that many consumers are saving more. After hitting zero four years ago, the personal savings rate jumped to 5.​9 percent in May before dropping to 3 percent in August as consumers took advantage of the short-​lived cash-​for-​clunkers auto rebate program. At the same time, with interest rates so low, finding the most comprehensive and objective list of savings rates is more important than ever. It'​s also trickier than ever." The piece says, "​Even more, just searching through the sheer number of sites listing savings rates can be daunting. New sites and blogs pop up every day, claiming to be the best source for savings account and C.​D. deals." See also, Businessweek'​s "​Are Investors Ready for Higher Interest Rates?", which is subtitled, "If the economy keeps growing, it hastens the day when the Federal Reserve ends the era of 0% interest rates."

ABCNews.​com'​s "'​Cash on Sidelines' Less Than Investors Anticipate: Goldman" says, "Investors could be disappointed if they anticipate tons of money waiting to get back into the stock market, since '​cash on the sidelines' is much less than estimated, Goldman Sachs analysts said. Based on their calculations, net equity inflow from individuals, institutional investors and corporations over the next several quarters could total $​600 billion, the analysts said in a research note on Wednesday." The Goldman Sachs "US Equity Views" piece is entitled, "Money Flow: myths & realities surrounding potential equity inflows." Using ICI data via Haver Analytics and Goldman Sachs Global ECS Research, it claims that $​1.​9 trillion is held in taxable money market funds owned by individuals, from which analysts expect $​600 billion in outflows (​with half of these going into equity markets). (ICI'​s latest figures, however, show just $​862 billion in retail money funds in total.) While it speculates massive outflows for money funds, the study oddly expects a mere $​50 billion in outflows from the much larger $​5.​8 trillion in savings deposits."

While it'​s now a little dated, we found this recent Wells Fargo Fund Commentary "​Overview, Strategy, and Outlook, as of September 30, 2009" good reading. It contains an excellent review of September 2008, saying, "We did it. We passed the one-​year anniversary of the beginning of the extraordinary credit and liquidity crisis that began in the summer of 2007 without further crisis, panic, or calamity. The decisive steps taken over the past year by central banks around the world, and especially the U.​S. Federal Reserve Bank, have led to a marked improvement in conditions in the money markets. Now the focus of market participants has shifted to the possible inflationary implications and unwinding of the programs that have led to the improved conditions we now enjoy. This shift in emphasis creates its own set of challenges for the money markets." It continues, "September 2009 was a completely different world than the one we lived in a year ago, at least in the financial markets. To see how far we'​ve come, it might be helpful to revisit some of the events of September 2008. [​See article for the highlights.] ... Now, with the improvement in the markets, the programs designed last fall to support the money markets continue to decline in importance. The main programs in this sector are the Commercial Paper Funding Facility (​CPFF) and the Asset-​Backed Commercial Paper Money Market Mutual Fund Lending Facility (​AMLF)."

A couple of recent additions have been made to the SEC'​s "​Comments on Proposed Rule: Money Market Fund Reform" page, including "Memorandum from the Office of Commissioner Aguilar regarding an October 23, 2009, meeting with representatives of the Investment Company Institute," "​Memorandum from the Office of Commissioner Aguilar regarding an August 26, 2009, meeting with representatives of Fidelity Management and Research Company," and "​Memorandum from the Office of Commissioner Aguilar regarding a September 23, 2009, meeting with representatives of the U.​S. Chamber of Commerce and A2/​P2 Issuers." The ICI Meeting summary says, "​On October 23, 2009, Commissioner Aguilar, and his counsel, Smeeta Ramarathnam met with Paul Stevens and Karrie McMillan of the ICI as well as with Edward Bernard, the new Chairman of the ICI. The representatives from the ICI discussed the proposals contained in the SEC'​s Release No. IC-​28807 titled, '​Money Market Fund Reform.' In particular, the representatives from the ICI articulated concerns expressed in their September 8, 2009 letter with establishing different liquidity requirements for money market funds depending on whether the funds were classified as institutional or retail and requiring funds to make redemptions in kind for redemptions of a certain size." The Fidelity meeting summary says, "In particular, the Fidelity representatives discussed the proposed weekly liquidity requirements for institutional money market funds and the proposed prohibition on money market fund investment in second tier securities."

A press release entitled, "Alpine'​s Muni Money Market & Ultra Low Duration Portfolio Manager to Host Webinar on Monday, October 26th at 3 PM Eastern was released late last week. It says, "Steven Shachat, portfolio manager of both the Alpine Municipal Money Market Fund (​AMUXX) and Alpine Ultra Short Tax Optimized Income Fund (​ATOIX/​ATOAX), will discuss tax-​free opportunities and strategies on an upcoming webinar for Financial Advisors and investors. With over 20 years of experience, Mr. Shachat will share his insight on issues facing the muni markets today including: Interest Rates, Credit Quality, Demand, and Issuance." Interested parties can listen and view the presentation at http://​www.​vcall.​com/​CustomEvent/​NA017783/​index2.​asp?​ID=​151429. See also, The Miami Herald'​s "​For safety you want, try money-​market funds" and Dow Jones' "​Federated Weighs Overseas Expansion".

ICI'​s latest weekly statistics release says, "Total money market mutual fund assets decreased by $​31.​27 billion to $​3.​372 trillion for the week ended Wednesday, October 21.... Taxable government funds decreased by $​13.​35 billion, taxable non-​government funds decreased by $​14.​56 billion, and tax-​exempt funds decreased by $​3.​36 billion. Assets of retail money market funds decreased by $​11.​66 billion to $​1.​104 trillion. Taxable government money market fund assets in the retail category decreased by $​4.​46 billion to $​170.​53 billion, taxable non-​government money market fund assets decreased by $​5.​85 billion to $​691.​90 billion, and tax-​exempt fund assets decreased by $​1.​35 billion to $​241.​35 billion. Assets of institutional money market funds decreased by $​19.​61 billion to $​2.​269 trillion. Among institutional funds, taxable government money market fund assets decreased by $​8.​88 billion to $​901.​14 billion, taxable non-​government money market fund assets decreased by $​8.​71 billion to $​1.​196 trillion, and tax-​exempt fund assets decreased by $​2.​02 billion to $​171.​53 billion." Money fund assets have declined by $​458 billion year-​to-​date (​12.​0%) and have decreased in 10 of the last 13 weeks. Assets have fallen by $​221 billion (​6.​1%) over the past 52 weeks and have now retreated to levels last seen in February 2008.

At 1pm Thursday, DB Advisors will host a webcast entitled, "Unwinding liquidity in the US economy: Implications for short-​term investors," which features, Kevin Bannerton, Head of Distribution, Liquidity Management, Americas, and Joe Benevento, Head of Portfolio Management, Liquidity Management, Americas. The overview says, "Many investors are wondering how the Federal Reserve will unwind the unprecedented levels of liquidity that have been injected into the US economy since September 2008. While the Fed'​s actions were necessary in order to stabilize the economy in the wake of the credit crisis, restoring liquidity to normal levels is a daunting task and is likely to have implications for the liquidity management business. Join us in exploring alternative strategies for managing cash in this changing environment." Also, on Friday at 9am, Federated Investors will host its "Third Quarter 2009 Earnings and Conference Call." (​Federated will also host its Quarterly Money Market Update with Deborah Cunningham on Thursday, October 29 at 4pm. (​Dial in: 1-​800-​862-​9098; Conference ID: Federated.)

"Moody'​s Revises Its Approach To Counterparty Rating Actions In Repo ABCP Conduits," which says, "Moody'​s Investors Service said today in a new Rating Methodology Supplement that it is revising its practice in respect of the ratings of repo asset-​backed commercial paper (​ABCP) conduits when one or more of the conduit'​s counterparties is subject to a rating action." "​Repo ABCP conduits are usually sponsored by firms that are not associated with a commercial bank or other large financial institution and which fund transactions from Prime-​1 rated firms on a fully-​supported basis," says Wolfgang Krauss, a Moody'​s Analyst and co-​author of the report. "​Due to the distinct structure of repo conduits, there is direct linkage between the Prime-​1 rating of the repo conduit and that of the counterparties under the repurchase (​or similar) transactions into which the conduit has entered. Accordingly, any rating action affecting any of these counterparties will have direct implications for the conduit'​s rating, irrespective of the size of the exposure, since the rating of the conduit is primarily based on a pass-​through of the counterparty rating(​s)." See also, WSJ'​s "​SEC Plans Two-​Part Money-​Market Reform" and "​EU wants single money market fund definition".

Crane Data'​s Peter Crane, Fidelity'​s Michael Morin, and SSgA'​s Jeff St. Peters will present "​The New Frontier in Money Market Funds & An Update on Current Conditions in the Money Markets" at a Nov. 18 meeting of the Treasury Management Association of New England (​TMANE) at the Federal Reserve Bank of Boston. The session description says, "Money fund expert Peter Crane will ... give an overview of developments in money market mutual funds. He will discuss money fund asset trends, pending regulatory changes, and a number of other issues impacting the $​3.​5 trillion money fund marketplace. Crane will also provide a wealth of statistics on the money fund sector. This will be followed by a panel of money fund portfolio managers, including Michael Morin from Fidelity and Jeff St. Peters from SSgA.... These senior PMs will discuss their money market investing strategies and will analyze the latest market conditions. Panelists will talk about what they'​re buying and what they'​re avoiding, and how they'​re adjusting to new regulations and the ultra-​low yield environment." In other event and conference news, IIR and iMoneyNet'​s Money Fund Forum takes place today in New York, and Eurofinance'​s "​International Cash & Treasury Management" takes place later this week in Copenhagen, Denmark. Crane Data won'​t be participating in either, but we are beginning the planning for our next Crane'​s Money Fund Symposium. MFS will be held July 26-​28, 2010, at the InterContinental Hotel in Boston. (​The website, at http://​www.​kinsleymeetings.​com/​crane should be ready for early registrations in the near future.) Contact Pete for information on speaking or sponsoring.

Treasury & Risk "​Whacking the System Over Breaking the Buck?" The article summarizes, "Spurred by the Reserve Primary Fund'​s drop below $​1 a share in the wake of Lehman'​s fall, proposed SEC rules on money market funds could end up curtailing many companies' ability to raise short-​term funds." It says, "​If the Securities and Exchange Commission'​s proposed rules governing money market mutual funds see the light of day, corporate treasurers will have to dig deeper for their companies' short-​term financing needs. The rules would, in effect, bar money market funds from investing in commercial paper issued by many of the country'​s largest and oldest companies.... [​C]​ritics charge that the commission is wielding a bigger stick than is necessary to tame an industry that needs scolding, at most. They contend that many major American companies' ability to issue commercial paper will be severely impaired, forcing some to abandon this form of short-​term debt issuance for more expensive alternative financing." In other news, The Boston Globe writes "​Harvard admits to $​1.​8b gaffe in cash holdings", which says, "​The university disclosed yesterday that it had lost $​1.​8 billion in cash -- money it relies on for the school'​s everyday expenses -- by investing it with its endowment fund, instead of keeping it in safe, bank-​like accounts.... Typically, companies and big institutions manage their cash conservatively in order to have it readily available, by keeping the money in such low-​risk investments as money-​market mutual funds."

CEO Walt Bettinger said, "​Right now, some individuals are relying on professional guidance to rebuild their participation in the equity markets, while others remain more comfortable emphasizing low-​risk cash and FDIC-​insured deposit products. CFO Joe Martinetto added, "​Our third quarter revenues were down 19% from the year-​earlier period, reflecting the headwinds we'​ve been discussing for some time. Net interest revenue declined 34% year-​over-​year despite continued growth in client cash balances as further reductions in short-​term interest rates lowered investment portfolio yields. Asset management and administration fees were helped by improving asset valuations, but money market fund fee waivers increased to $​78 million as anticipated, resulting in a 24% decline." See also, Investment News' "​Schwab slapped with SEC warning; YieldPlus settlement may be on the horizon". Schwab is the 8th largest manager of money market funds with over $​177 billion in assets (​down 10.​9% over the past 12 months), according to Money Fund Intelligence XLS. BlackRock, the fifth largest money fund manager, is scheduled to report Q3 earnings on Oct. 20, and Federated Investors, the third largest, is scheduled to release earnings late on Oct. 22.

"​Next run on money market funds could kill industry, SEC official says" writes Investment News. It says, "If money market funds experience another run similar to the one that happened in September 2008, the money fund industry is unlikely to survive in its current form," according to `​Bob Plaze, who says the SEC could finalize their reform proposals by the end of the year. Plaze, associate director of the SEC'​s Division of Investment Management, spoke at a panel discussion sponsored by the District of Columbia Bar Association reports Investment News. The story says, "Mr. Plaze also is co-​chairman of the money market fund subgroup of the President'​s Working Group on Financial Markets, which is to issue a report by Dec. 1 making recommendations on whether changes are necessary to reduce money fund'​s susceptibility to runs.... The SEC is likely to change money market fund regulation in two stages, he said. The first set of regulations will be based on the proposal issued by the SEC in June.... More sweeping rules, dealing with controversial issues like whether money market funds should have a floating net asset value instead of a fixed $​1 per share value, could come next year, Mr. Plaze said."

Arrowhead Credit Research Corp. announced its debut with a press release entitled, "​Respected Industry Veterans Launch New Independent Credit Research Firm". The new short-​duration credit research firm'​s announcement says, "Arrowhead Credit Research Corp. launches today to provide high quality, in-​depth and unbiased credit research to institutional investors including corporate treasurers, pension funds, endowments and hedge funds that manage cash and liquid assets. The subscription-​based services offered by Arrowhead Credit Research will support and supplement the internal credit analysis conducted by institutional investors with an emphasis on timely reporting and independent commentary on short-​duration credit instruments. Led by industry veterans Zachary H Pashel, chief executive officer, and Barry D. Weiss, director of research ... Arrowhead Credit Research enters the market offering credit research including annual reports and event-​driven updates on a large universe of securities and the Arrowhead Weekly -- a commentary on current and emerging market themes, including yield-​curve analysis. The firm also offers custom credit research and analysis." Pashel says, "As cash and money market investors have grown wary of the potential conflicts underlying the credit research generated by credit agencies and brokers, and the inadequate services currently available, the need for unbiased, customer-​focused credit research has increased significantly. There is a tremendous opportunity for Arrowhead to fill this knowledge gap with our impartial analysis that is not motivated by outside forces."

Investment News writes "​Money funds caught between staying safe and staying around", which says, "These days, money market funds are investing only the safest securities. But rather than trust the industry to continue doing right by investors on its own, regulators are considering new policing guidelines that may result in safer money funds and fewer fund managers." It adds, "Evidence of the squeeze on money funds can be seen in the number of fund consolidations that have occurred recently. In July, Aston Asset Management LLC, formerly ABN Amro Asset Management Holdings Inc., liquidated its funds, becoming the sixth firm in two years to leave the money fund business according to consulting firm Crane Data LLC. Also closing their funds were Calamos Advisors LLC, Credit Suisse Asset Management LLC, Munder Capital Management, Utendahl Capital Management LP and Monarch Investment Advisors LLC."

Bloomberg'​s writes today, "​Fed Said to Consider Clearing Banks, Facility to Drain Reserves", which discusses the Fed'​s possible use of reverse repos. The Weekly "​Money Market Mutual Fund Assets" says, "Total money market mutual fund assets increased by $​16.​72 billion to $​3.​446 trillion for the week ended Wednesday, October 7, the Investment Company Institute reported today. Taxable government funds decreased by $​6.​11 billion, taxable non-​government funds increased by $​19.​08 billion, and tax-​exempt funds increased by $​3.​75 billion. Assets of retail money market funds decreased by $​2.​91 billion to $​1.​122 trillion. Taxable government money market fund assets in the retail category decreased by $​840 million to $​176.​38 billion, taxable non-​government money market fund assets decreased by $​2.​44 billion to $​701.​66 billion, and tax-​exempt fund assets increased by $​370 million to $​244.​11 billion.... Assets of institutional money market funds increased by $​19.​63 billion to $​2.​324 trillion. Among institutional funds, taxable government money market fund assets decreased by $​5.​27 billion to $​939.​92 billion, taxable non-​government money market fund assets increased by $​21.​52 billion to $​1.​208 trillion, and tax-​exempt fund assets increased by $​3.​38 billion to $​175.​30 billion." ICI also recently sent out a notice to members that the next meeting of their Insitutional Money Market Funds Committee will be November 16 in New York at JPMorgan.

"​In an uncertain economy, what could be safer than a pile of money?" asks The Pittsburgh Post-​Gazette. It says, "At a very practical level, cash is a relatively safe investment that rarely loses its nominal value, unlike stocks and long-​term bonds, which could lose value and, in the worst of circumstances, become worthless. At a more strategic level, cash makes it possible for an investor to buy other assets when prices take a dive.... Although cash-​related assets such as U.​S. Treasury bills, CDs and money market funds are paying close to 0 percent, when compared to asset classes that took a deep plunge in the market meltdown last year, 0 percent is still a better return than losing money." The article continues, "​So, if the idea is to preserve capital and temporarily hide from uncertain market conditions, what could be safer than holding a pile of cold cash? ... Still, some experts say at least for the short term, there'​s nothing wrong with sitting on a hoard of cash, especially if your tolerance for risk is low.... Generally, there are six ways for investors to hold cash: savings accounts, money market accounts, money market funds, U.​S. Treasury bills, bank CDs and ultra-​short bond funds."

While searching for "​sweep account" news, we noted a Google ad from Agiletics Fund Sweep System. The company'​s "Money Market Mutual Fund Sweep and Shareholder Accounting System," "performs full shareholder accounting and reporting for money market mutual funds." The company'​s website says it is, "​Fully automated, bi-​directional, same-​day and next-​day sweeping between DDA and funds are provided. A DDA account'​s surplus balance may be invested into multiple funds from numerous fund companies.... Omnibus accounting insures that all of your confidential customer information remains in your bank. Automated factor pricing interfaces are supported. Complete dividend, capital gains, fee processing, and comprehensive customer statements are provided. The same applicable cost efficient features available in the Agiletics Investments System apply to the Agiletics Fund Sweep System."

Today'​s Wall Street Journal writes "​Looking Beyond Money Funds". It says, "With yields on money-​market mutual funds at record lows, many individuals have been pulling cash out of these low-​risk parking places and stashing it elsewhere. More people might do the same if they focused on how little they are earning: A $​10,​000 money-​fund stake yields just $​5 a year in earnings at last week'​s average 0.​05% seven-​day yield on taxable funds, as tracked by iMoneynet Inc. Yes, that annualized yield is five-​hundredths of a percentage point. Where to go? Savings accounts and short-​term certificates of deposit from banks offering above-​average rates are worth considering. So are some short-​term bond mutual funds, at least for a portion of your money-​fund dollars, though they expose your savings to a much greater risk of principal loss. To be fair, though, savers amazed at low money-​fund yields should recognize that the funds are doing exactly what they are designed to do: pass along the interest rates in a particular segment of the financial markets, that of high-​quality debt with very short maturities. The Federal Reserve has pushed those rates near zero in its effort to stimulate the economy."

"​ICI Reports Money Market Mutual Fund Assets", saying "Total money market mutual fund assets decreased by $​53.​52 billion to $​3.​429 trillion for the week ended Wednesday, September 30, the Investment Company Institute reported.... Taxable government funds decreased by $​10.​92 billion, taxable non-​government funds decreased by $​35.​52 billion, and tax-​exempt funds decreased by $​7.​08 billion.... Assets of retail money market funds decreased by $​12.​99 billion to $​1.​125 trillion.... Assets of institutional money market funds decreased by $​40.​54 billion to $​2.​304 trillion." Assets declines likely were due to quarter-​end, when higher overnight repo rates draw cash out of money funds and into overnight investments. Money funds also continue to experience outflows due to virtually zero yields, as investors seek higher returns in bank products, bonds, and other alternatives. For September, money fund assets have declined by about $​130 billion, and year-​to-​date, money market mutual funds have declined by over $​400 billion, or 10.​5%.

"​Institutional Cash Distributors and Kyriba Partner to Streamline Cash and Investment Management" says a recent press release. It says the portal provider and treasury workstation company, "​announced a partnership designed to meet the increased demand for transparency and efficiencies across cash and investment management." The release states, "​The combined solution will allow finance and treasury managers of any organization to achieve complete visibility on enterprise-​wide cash flows and facilitate a straight-​through process for investing. Kyriba'​s SaaS platform enables a straightforward integration with the ICD portal, and the joint offering is expected to attract the companies' mutual clients and drive new business to a unique '​best-​of-​breed' solution." Jeffrey Jellison says, "ICD was founded to offer its clients a technology-​based platform to provide the flexibility and efficiency of investing in a variety of institutional money funds across multiple currencies. Our commitment to and focus on technology has allowed us to continue to serve our customers needs as the client focus has shifted from yield performance to global transparency. Our partnership with Kyriba further supports this commitment to our clients." Jean-​Luc Robert, CEO of Kyriba, notes, "​The depth and functional breadth of Kyriba'​s treasury management platform combined with our SaaS deployment model allow our clients to quickly obtain a complete picture of liquidity across the enterprise while incorporating more structured workflows and controls." In other news, two recent S&​P releases say, "Standard & Poor'​s Ratings Services said today that it has assigned its '​AAAm' principal stability fund rating to the JPMorgan JPY Cash Liquidity Fund (​the Fund). The Fund is structured as a Japanese domiciled contractual open-​ended bond investment trust." and "Standard & Poor'​s Ratings Services said today that it has assigned its highest principal stability fund rating of '​AAAm' to BNP Paribas InstiCash - BNP Paribas InstiCash EUR Government and to BNP Paribas Liquidites Euro, two money market funds, managed by BNP Paribas Asset Management."

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