Posts from Tuesday Aug 7 2012

The Closer

ROUND-UP

FT markets round-up: “Global stocks and other growth-sensitive assets gained momentum and extended a rally amid a string of better-than-expected earnings reports in the US and Europe, and hopes that central banks will provide additional stimulus to ailing economies. On Wall Street, upbeat earnings and profit forecasts by companies including Chesapeake, the second-largest natural gas producer in the US, and retail apparel Fossil, helped push the S&P 500 up for a third day with a gain of 0.6 per cent. The index, which gained almost 3 per cent in the past three sessions, traded above the 1,400 mark for the first time since the start of May. Commodities reversed some early mild selling and copper, a gauge of global manufacturing activity, rose 1.5 per cent to $3.44 a pound. Brent crude added 2 per cent to $111.74 a barrel.” (Financial TimesRead more

US consumer credit: back to sideways

Quite a change from last month.

A disappointing consumer credit report for June as revolving credit contracted (click to enlarge): Read more

Cash is king for US multinationals

A recent note by the National Bureau of Economic Research takes an interesting look at companies’ tendency to increase their cash holdings (click image to download the full report):

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Bernanke Live

The Bearded One is giving a speech to educators at 2:30pm, followed by a Q&A. We doubt he’ll slip and give any hints about upcoming monetary policy decisions, but it might be interesting. Click below to watch:

Ironische Bundesbank lessons

A grainy picture of some central bankers. A warning in German that “it is immensely amateurish to renounce this mechanism.”

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Gold QE

The calls for QE3 continue to rage.

But as FT Alphaville has discussed at length, QE3 in its conventional guise — freshly minted base money in exchange for US government bonds — might not really be an option due to the squeeze it causes in the US Treasury market. Read more

FTAV’s wholly unscientific survey

What do you think about this press release that landed in FT Alphaville’s inbox this morning from the Chartered Institute for Securities & Investment? (emphasis ours):

Two-thirds (68%) of financial services practitioners retain little or no trust in the UK banking industry following the latest scandals to hit the sector, a CISI survey shows. Read more

Positively Freddie

It’s GSEs. It’s a guilty pleasure of sorts in housing recovery indicators. It’s also – arguably – the future of US housing reform.

Freddie Mac posted $3bn of net income in the second quarter. That means it has positive net worth (well a pat on the back for you, Freddie) and hence, it’s paying far more back to the US Treasury this year than it’s taking out, in dividends on the government’s preferred stock. (See also Fannie, earlier.) Read more

To what degree is the ECB flying blind?

Or for that matter, to what degree are national regulators?

Effective monitoring means having good data. The data the European Central Bank currently have is arguably not enough for even the macro-prudential supervision they’d like to do, let alone the more specific kind — a troubling thought if it is to build out a regulatory capacity. Data availability is hampered by legal issues as well as challenges around design and collection. Read more

A regulator gone rogue? Maybe, maybe not

At pixel time, shares in Standard Chartered were down 31 per cent from the point at which this was published — an “Order Pursuant to Banking Law No 39,” issued by the New York State Department of Financial Services.

In lurid detail, this sets out the claim that the London-based EM bank willfully evaded US sanctions against Iran over the course of a decade. Read more

The (early) Lunch Wrap

Good morning New York…

FT ALPHAVILLE Read more

The Aussie dollar – from South Pacific peso to Southern franc

It can’t be much fun being an Australian in London at the moment. (Trailing the Brits is one thing, but lagging the Kiwis in the medal table must really hurt.)

But at least our antipodean visitors can afford to indulge in a little retail therapy at Westfield Stratford City (the Australian dollar is trading close to a record high against the British pound) or, if they are really embarrassed, hop on the Eurostar to Paris (where the dollar hit a record high against the eurothingy just last week). Read more

China’s doubling-down continues, via local governments

News that the Chinese city of Changsha, in the central Hunan province, plans to spend Rmb829m, or 150 per cent of its GDP, made waves last month. It’s a fairly small city and one that was reportedly booming just weeks earlier.

We recently made the point that slowing growth was leading the central government to back away from its tentative plans to rebalance the economy, and instead doubling down on imbalances with its push to keep GDP growing through investment, particularly in infrastructure. Read more

Further reading

Elsewhere on Tuesday,

- ProPublica gets (more) lowdown on MagnetarRead more

The 6am Cut London

Standard Chartered is accused of deliberately flouting US sanctions against Irans by the New York state Department of Financial Services. The regulator says the bank engaged in “wire stripping”, or removing codes that identify Iranian clients from money transfers (Financial Times). It also said Deloitte & Touche, which reviewed StanChart’s compliance record, “apparently aided” the bank in withholding information from regulators (Reuters). The news ”came as a bolt from the blue for the bank, according to people familiar with the matter, even though it has been in talks with US authorities over the issue for months” (Financial Times).

A Tokyo Stock Exchage computer error halted trading of Topix Index futures, Japanese government bond futures and options trading for more than 90 minutes, the second time in seven months a malfunction has forced a shutdown (Bloomberg). Read more