Good morning New York…
RBA, on further inspection, finds glass half empty: Australia’s central bank cut its overnight cash rate by 25 bps today, to 3.25 per cent — close to the crisis-level low of 3 per cent. It’s interesting for several reasons, one of which is that many strategists didn’t see it coming… Kate’s post has the statement and the early market reaction.
The Russia liquidity house: Moscow’s recent liquidity operations have been so substantial, they almost make Beijing’s efforts look puny in comparison. The central bank offered 1.11tn roubles in seven-day and 200bn roubles in one-day on Tuesday, which amounts to some $42bn and is more than 2 per cent of Russian GDP. Izzy’s post looks at the parallels with China and what this means for the rouble’s trading band.
Hedgie billionaires: we’re a sleeper cell of battered wives headed by the pope… or something. Joseph and Cardiff’s post takes a look at why the 0.01 per cent are feeling victimised by president Obama, and wonder why some of them are using Occupy-originated rhetoric to articulate their woes.
Sovereign risk-weighting, face-off du jour: European bank capital legislation is letting big cross-border lenders play a bit too fast and loose with zero risk-weighting of government bonds for Basel’s taste. Joseph’s post looks at the EU response, and doesn’t find it very constructive.
JPMorgan sued over alleged Bear fraud: The bank has been accused of defrauding investors who lost more than $20bn on mortgage-backed securities written by Bear Stearns, the FT reports. Threatening similar claims against other banks, the office of Eric Schneiderman, New York attorney-general, said Bear Stearns, which JPMorgan acquired in 2008, had “committed multiple fraudulent and deceptive acts in promoting and selling” MBS.
Banks reap profits on mortgages after QE3: Profits from new mortgages have soared since the Federal Reserve began its third round of bond purchases two weeks ago, fuelling the debate over the fallout of the latest dose of quantitative easing, reports the FT. The extent to which QE3 drives down new mortgage rates and helps homeowners or is pocketed by banks will be crucial to the success of the policy and the prospects for growth in the US and global economies next year.
HFTs looking for regulation: A gradual shift in attitudes in the world’s biggest high-frequency trading firms is under way, as they start to see benefits to some kind of regulatory oversight, reports the WSJ. It follows a series of high-profile technology blunders, such the near-blow-up of Knight Capital in August.
Google market cap tops Microsoft’s: For the first time Google’s stock market value exceeded that of Microsoft, capping a decade-long struggle for dominance between leaders of the PC and internet eras of computing, the FT reports. In the first flush of optimism that followed its IPO, investors nearly drove Google’s value beyond that of Microsoft in 2007. However, the stock later retreated as Wall Street grew worried that the company was pouring too much money into loss-making ventures such as the YouTube video site and Android mobile operating system.
AstraZeneca’s new chief suspends buybacks: Pascal Soriot, the pharma company’s new chief executive, asserted his authority on his first day in the job by suspending share buybacks for the rest of the year, strengthening the company’s resources to fund potential acquisitions, the FT reports. The action means the company will retain the $2.2bn so far unspent of its previously pledged $4.2bn buyback programme for the year.
Markets: Global markets are seeing a muddled session as traders absorb a recent batch of contrasting economic data and central bank actions provide underlying support for the bulls, writes the FT’s global markets overview. The FTSE All-World equity index is down 0.2 per cent – and US futures point to a flat start for Wall Street – on a day when the usual gauges of risk appetite are not giving a clear signal. The dollar index is down 0.1 per cent, while copper, which usually moves with a negative correlation to the buck, is also under pressure, falling 0.2 per cent to $3.78 per pound. Crude oil is near a one-week high, reports Bloomberg.