Good morning New York,
FT ALPHAVILLE
Stock market wags economy, or not? After a few days of volatility the S&P 500 rebounded on the back of better than expected jobs data last Friday. Meanwhile the Nikkei, the decline of which the previous week seems to have precipitated the shakiness in the S&P 500, started to stabilize on Monday. And so the classic question rears its head once more: do stock markets drive the economy or vice versa? Guest writer Philip Pilkington has a shot at answering that question.
Japan, rolling coverage: The Nikkei was up 4.9 per cent at 13514 during the official Tokyo session, rising towards 13700 during after hours trading; the Topix was up 5.2 per cent and the yen 1.1 per cent weaker at Y98.6. Sigh…
NEWS
Japan revised up Q1 growth to annual 4.1%: "Japan has revised up its first quarter economic growth to 1 per cent, giving Prime Minister Shinzo Abe a boost as he seeks to strengthen his grip on power in next month's upper house elections. Government data released on Monday showed that the economy expanded at an annualised rate of 4.1 per cent between January and March, lifted by strong household spending and a pick-up in private residential investment. That was much higher than the preliminary estimate of 3.5 per cent, which was already the fastest rate recorded by any Group of Seven economy." (Financial Times)
Backlash over US snooping intensifies: "The Obama administration came under mounting bipartisan pressure on Sunday to scale back electronic surveillance following revelations last week that have raised new questions about government intrusion into citizens' privacy. The calls came as the UK's Guardian newspaper revealed that the whistleblower who leaked information about US surveillance activities was Edward Snowden, a 29-year-old former CIA employee who has taken refuge in Hong Kong, setting up a potentially delicate political issue with the Chinese authorities about his fate." (Financial Times)
Indian rupee hits record low amid Fed 'tapering' worries: India's struggling rupee hit a record low against the US dollar on Monday, part of a wider sell-off in some emerging market currencies that now threatens to derail attempts to revive growth in Asia's third-largest economy. The rupee fell as far as 57.82 against the dollar, surpassing a previous all-time low of 57.32 set in the middle of 2012. (Financial Times)
China's economy stumbles in May, growth seen sliding in Q2: Exports posted their lowest annual growth rate in almost a year in May at 1 percent, exposing a more realistic picture of trade following a crackdown by authorities on currency speculation disguised as export trades to skirt capital controls, which had created double-digit rises in export growth every month this year even as world growth stuttered. May exports to both the United States and the European Union - China's top two markets - both fell from a year earlier for the third month running. (Reuters)
SEC counsel faces whistleblower's claims: "The new chief counsel to the Securities and Exchange Commission chairman is the subject of a discrimination complaint from a former colleague at Deutsche Bank, who claims he was fired for blowing the whistle on fraud. Robert Rice joined the SEC last week, working directly for Mary Jo White, the new SEC chairman. He moved from Deutsche where he was head of governance, litigation and regulation for the Americas." (Financial Times)
Bank reforms spur BNP Paribas to merge US units: "BNP Paribas is planning a full-blown merger of its US operations as it attempts to offset the impact of threatened US regulatory reforms for foreign banks, according to people familiar with the project. The French bank, which is one of the world's largest by assets, has drawn up detailed plans to combine BancWest, its US retail banking subsidiary, with its US corporate and investment banking operations in a move intended to improve its capital and funding efficiency in the country." (Financial Times)
Hearing pits German monetary heavyweights against each other: "One of the bitterest fights in monetary policy lands in court this week as Germany's highest legal authority hears evidence over whether the European Central Bank's pledge to save the euro last year undermined the constitution. The hearing comes as crisis-weary Germans prepare to vote in a September general election that for the first time includes a eurosceptic party. But also of note are the star witnesses, two longstanding friends who have risen through the ranks to become arguably Germany's most powerful unelected officials. Both have been instrumental in framing the response to the eurozone crisis but are now fighting from opposing corners." (Financial Times)
Markets: Japanese equity markets rallied sharply as investors digested the better than expected US jobs report last week, but gains across Europe and the rest of Asia were limited by poor economic data from China. The Nikkei 225 Stock index rallied 5 per cent, snapping a three-day losing streak and shying away from bear market territory. The Nikkei is 15 per cent below its May 23 peak, however. But European markets, which responded to the US jobs report on Friday, opened lower on the back of weak Chinese trade data. The Eurofirst 300 index was down 0.2 per cent writes the FT's Global Markets seducer Michael Stothard.
