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Bank of Japan maintains asset-buying programme || Sony board discusses Daniel Loeb proposal || Taxing Apple || RICO and SAC || Gupta challenges U.S. wiretaps in appeal || Japanese trade data disappoints || Dimon prevails on dual role || Immigration legislation sent to Senate || Temasek raises stake in ICBC as Goldman exits || Fiat Industrial aims to move its tax residency to the UK from Italy || Italy considers plan for older workers to ‘handoff’ to younger generations || Markets || FTAV’s latest Read more
We’ve all heard, many times, the story that China’s capital stock is nowhere near that of more advanced economies, therefore it will inevitably increase. And we can count on continued efforts to build roads, buildings, airports, and other infrastructure — just look at how the less-developed eastern provinces have been pouring money into new projects, the argument has gone, more recently. Or went.
We really hope it’s not necessary, here, to go into the weaknesses of that argument. Here are a few places to start, but it’s partly a causal problem — does growth cause increased capital stock or vice versa? What kind of growth are we talking about, anyway? Read more
Elsewhere on Wednesday,
- The Fed’s Dudley on lessons from the zero bound.
- And then… there’s Bernanke.
- Muppet fund of muppets. Guess whose? Read more
Asian stocks held gains, the Nikkei rose 1.1% and the MSCI rose 0.3%, headed for its highest close since June 2008. (Bloomberg)
Bank of Japan maintains asset-buying programme: The May monetary policy statement made no mention of recent rises in JGB yields, and said its decision came amid signs of “positive movement” in the economy. (Financial Times)(Statement) Read more
The Bank of Japan’s May statement on monetary policy is out, and it’s basically a big MAINTAIN on its ‘quantitative and qualitative easing’ (QQE) programme.
If anyone was anticipating the BoJ might take this opportunity to point out it is mindful of recent rises in government bond yields — and apparently some were expecting this sort of reassurance, possibly even tweaking maturities purchased — they would be disappointed. Equities traders just seemed relieved that their rally will continue.
However one member, Takahide Kiuchi, proposed the 2 per cent inflation target shift to a “medium to long term” and the new QQE plan itself be designated as “an intensive measure with a time frame of about two years”. Kiuchi’s proposal at this meeting was voted down by the other eight board members. The central bank has, however, already revealed that some members are concerned about the risks of its QQE plans hurting retail investors in Japanese government debt. Read more
FURTHER FURTHER READING
- Why Jamie Dimon remains both chairman and chief executive of JPMorgan: because he makes money, and because he makes money. (But is that a chairman’s job?)
- No more economist superstars?
- Watch what they do, not what they say, Dodd-Frank lobbying edition. Read more
This is what JPMorgan investors were treated to on the webcast, after hearing shareholders at the bank’s annual meeting vote against splitting the chairman and chief executive roles…
Apple CEO Tim Cook is up soon in front of a US Senate committee. First though, Professor Stephen E. Shay of Harvard, who knows both his tax and his bow-ties:
Click through the pic for the C-Span stream.
Alternatively, join our colleagues over at the FT’s Tech blog, where the action is being discussed in detail. Read more
From historical chart specialists Global Financial Data — the yield on perpetual Consols versus the stock of UK sovereign debt…all the way back to 1742. Click to view… Read more
From SocGen’s Andrew Lapthorne and quant team: in the first quarter of 2013, buybacks done to offset the dilution from executive stock options maturing reached near a post crisis high and ticked past the amount of buybacks done to reduce the overall share count — you know, those done to benefit the shareholders:
Is it only going to get worse before it gets better?
Societe Generale think so: as the chart says, they’re expecting it to reach 30 per cent in 2015 (from an already-awful and record-breaking 27.2 per cent, at last count). Read more
Spot the outliers:
Live markets commentary from FT.com
Oklahoma tornado kills dozens and flattens town || Congress accuses Apple of avoiding billions in tax || U.S. and Europe prepare to settle Chinese solar panel cases || US corn rush threatens prices || Vodafone to reinvest £2.1bn Verizon dividend || Qatar buying fresh stakes in key banks || Goldman Sachs is selling its remaining shares in Industrial & Commercial Bank of China || Riverstone leads talks of $1bn commodities venture || Japan panel warns of dangers if debt not addressed || U.K. inflation slowed more than economists forecast in April || Markets roundup || FTAV’s latest Read more
Maybe.
Nomura carries out an annual survey on individual investors’ voting intentions and this year’s results suggest 43.8 per cent of respondents plan to exercise their rights — a a 5.1 percentage point jump from 2012. That compares with a record activism reading of 45.1 per cent in 2010, but it’s also worth noting that those investors saying they would not use their voting rights dropped from 30.6 per cent to 25.8 per cent. So engagement is clearly on the rise.
What are they likely to vote on? Directors pay, of course (34.5 per cent) – and retirement bungs (37 per cent). Read more
Yes, it’s hardly a neutral document on the matter.
Still, there are lots of interesting charts in the UK government’s latest report on the finance and economics of Scotland becoming a sovereign state, this time covering the dangers from banks…
…Although we think they missed one.*
Asian shares retreat, yen weakens, silver falls || BoJ meeting starts today || Apple paid almost no tax on $74bn || Oklahoma declared ‘major disaster’ || Goldman sells last of ICBC shares || Qatar buying into Deutsche Bank, VTB || Europe’s transaction tax plans to be diluted Read more
Here it is Goldman’s big call: the S&P 500 will reach 1,750 by the end of this year; 1,900 in 2014; and 2,100 in 2015.
H/T Josh Brown, who points out this isn’t about earnings but a re-rating of equities (and dividends). Read more
Compare (Apple’s testimony to the Senate permanent subcommittee on investigations, on Monday):
Apple pays an extraordinary amount in US taxes. Apple is likely the largest corporate income tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury in FY2012. These payments account for $1 in every $40 in corporate income tax the US Treasury collected last year. The Company’s FY2012 total US federal cash effective tax rate was approximately 30.5%. The Company expects to pay over $7 billion in taxes to the US Treasury in its current fiscal year. In accordance with US law, Apple pays US corporate income taxes on the profits earned from its sales in the US and on the investment income of its Controlled Foreign Corporations (“CFCs”), including the investment earnings of its Irish subsidiary, Apple Operations International (“AOI”)… Read more
FURTHER FURTHER READING
- A debate on helicopter dropping as a legit policy option.
- The Atlantic with an in-depth look back at the Facebook IPO.
The sum and substance, in a couple of slides:
HQC stands for “High Quality Collateral”, and FTQ is “Flight to Quality”. Click to enlarge.
The charts are from a special presentation included in the fiscal Q2 report by the Treasury Department’s Office of Debt Management. Read more
Despite all the talk of rampant physical precious metals buying, in dollar terms it’s only getting worse for the “gold HAS INTRINSIC value” brigade.
Another way of looking at it, of course, is that the dollar’s value is being rebased. Read more
The FTSE 100 has closed at 6755, cruising past its 2007 pre-crisis peak to its highest level since 2000:
Rally monkey and suitable pessimism after the jump. Read more
Many factors affect the development of the economy, notably among them a nation’s economic and political institutions, but over long periods probably the most important factor is the pace of scientific and technological progress.
That’s Ben Bernanke addressing a graduating class at Bard College at Simon’s Rock, Massachusetts, on Saturday. He goes on to say that not everyone believes this advancement is going to continue at such a great pace.
Yes, he is talking about Robert Gordon and Tyler Cowen, and their arguments that much of the low-hanging fruit has been plucked and we face a lower-growth future, as evidenced by the incremental advancements of recent years. Read more
From ICAP’s Gilt Repo Comment on Monday:
The announcement by the DMO of further supply of UKT4T 15 (1.75 bln on the 29th May) is welcomed in light of the issue’s “tightness” in the REPO market. The bond overnight has averaged 11 bps through DBV to date in May and was tight in the 1st quarter. However, post Friday’s announcement the bond held its premium in term and it is not certain the additional supply will cheapen the issue despite the free float increasing.
Today in Abenomics, we saw some yen strengthening after Japan’s economy minister Akira Amari made remarks interpreted as indicating the yen had weakened enough:
“People say the excessively strong yen has corrected quite a bit. If the yen continues to weaken steadily from here, negative effects on people’s lives will emerge,” Amari told a Sunday talk show.
All very exciting and the yen strengthened accordingly, allowing us the space to take a longer look at the progress Japan’s reflation experiment has made. Read more
Live markets commentary from FT.com
Yahoo buys Tumblr for $1bn || Portuguese banks fear ‘Cyprus virus’ || Chesapeake taps Anadarko executive Lawler as CEO || The yen gained as much as 1.1% || Chinese house price data raises overheating fears || Concern is growing that US banks are making risky corporate loans || King warns Osborne on Help To Buy risk || Cohen is subpoenaed || Silver is at its lowest price level in more than two and a half years || M&A lending remains meagre despite low interest rates || Co-op’s retiring chief skips meeting || Markets summary || FTAV’s latest Read more