Good morning New York,
FT ALPHAVILLE
Gaffe TV: Paul captured the moment , on Reuters Video on Tuesday (03:54 on the countdown clock) , when Germany's Asmussen said that the ECB's forward guidance would extend past 12 months. In keeping with the smooth state of ECB comms, the central bank rowed back on Asmussen's words later.
Why China's June trade data are almost unremittingly bad: The short answer, says Kate, is that the June trade numbers missed expectations by a long way, and the details did nothing to provide reassurance. And there's now a real possibility that China might actually miss its growth targets for the first time in 15 years.
NEWS
China's June trade data pointed to a deeper slowdown: Exports fell 3.1% year-on-year, compared to consensus forecasts of 3.7% growth. Imports also fell, by 0.7%. The month-on-month picture was worse; exports fell 4.6% from May, while imports decreased 9.3%. A customs spokesman said the country "is facing serious challenges in foreign trade at present". (Financial Times) (Reuters)
Saudi Arabia and UAE prop up Egypt regime with offer of $8bn: Saudi Arabia and the United Arab Emirates have pledged a total of $8bn to Egypt to help prop up its ailing economy, highlighting the shake-up in regional political power after last week's military coup in Cairo. Riyadh has promised to send $5bn and Abu Dhabi $3bn in a mix of cash, central bank deposits and oil products, as the new Egyptian administration grapples to halt the slide in the pound and stave off a foreign exchange reserves crisis. (Financial Times)
Brussels sets up clash with Berlin over banks: Brussels is confronting Berlin over the future of Europe's banking union, with a fast-tracked plan for a powerful bank executioner in Brussels to wind up failed lenders, backed by a €60bn cross-border rescue fund. The resolution authority blueprint to be unveiled later on Wednesday is an ambitious attempt to give teeth to eurozone financial integration, in effect pooling money and power to establish a common defence against bank crises. (Financial Times) (Wall Street Journal) (Bloomberg)
Bakries offer to sell Bumi stake: Indonesia's powerful Bakrie family is proposing to sell its entire 23.8 per cent stake in Bumi, the London-listed coal miner, to Samin Tan, the company's chairman and major shareholder. The move, which would leave Mr Tan with a 47 per cent interest in the Indonesia-focused miner, represents a big change to the plan to separate Bumi from the Bakrie family, which was first unveiled last October. (Financial Times)
J.P. Morgan review finds errors in debt-collection lawsuits: "The bank studied roughly 1,000 lawsuits and found mistakes in 9% of the cases, said people familiar with the review... The errors ranged from inaccurate interest and fees applied by outside law firms to a "small number of instances" in which lawsuits listed higher balances than the amounts owed by borrowers, according to an internal document reviewed by The Wall Street Journal. In certain cases sworn documents were signed without knowledge of their accuracy, according to the document." (Wall Street Journal)
Rupert Murdoch has been summoned to reappear before the culture, media and sport select committee following remarks he made in relation to police investigations into press abuses. (Financial Times)
The BoJ is unlikely to ease further this year, according to forecasters: Signs that inflation may eventuate from its actions so far have led to changes in forecasts. "Thirteen of 20 economists in a Bloomberg News survey completed July 8 saw no extra loosening in the next six months, a reversal from a poll in May." The BoJ's July policy board meeting begins today and ends tomorrow. (Bloomberg)
German and French companies to benefit from lower borrowing costs while their peripheral counterparts will continue to struggle: Of a total €42bn reduction in total corporate debt payments over the next five years due to low ECB interest rates, €14bn would go to German companies and €9bn to French. Yet Spain and Portugal will see slightly higher interest rates, according to FT analysis of ECB data. (Financial Times)
The US government has officially designated AIG and GE Capital as "systemically important" financial institutions that will have to hold higher capital reserves: Prudential Financial is appealing against such a designation. (Financial Times) The Fed and FDIC proposed yesterday that the largest US banks hold capital equivalent to 5% of assets, higher than the Basel III standard of 3%. (Financial Times)
Plan reins In biggest banks: "The Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are effectively trying to force big banks to become more conservative or to shrink. The first step, proposed Tuesday, would require banks to double the amount of capital they hold as protection against every loan, investment, building, security and other asset on their books—not just the risky ones. Eight big bank-holding companies would have to increase their so-called leverage ratios to 5%, while their FDIC-insured bank subsidiaries would have to increase them to 6%—well above the 3% agreed upon by global regulators." (Wall Street Journal)
Markets: Poor China trade data are reinforcing concerns about the health of the world's second-biggest economy, but hopes Beijing will respond by easing policy to spur activity is helping support trader sentiment.Though Wall Street is slated to dip fractionally, it remains within touching distance of record highs on underlying optimism about the US corporate earnings season and as investors seem to come to terms with the prospect of reduced Federal Reserve largesse later this year. The yen is strengthening, industrial commodities are rallying and Treasury prices are firming, nudging yields lower. The FTSE All-World equity index is up 0.3 per cent as the FTSE Eurofirst 300 climbs 0.3 per cent and after the Asia-Pacific region rose 0.6 per cent writes the FT's Global Markets ring-bearer Jamie Chisholm.
