Good morning New York,
FT ALPHAVILLE
Already-strong case for Yellen strengthens further, and a word about the inanity of "market" preferences: Cardiff took a little time to beat up some of the more irritating arguments whirling about, noting that with the exception of certain commentators who get paid ostensibly to act like inveterate morons, nobody has doubted Janet Yellen's record of analytical prescience in the past decade.
A great China reckoning might not happen in quite the way you'd expect: A couple of weeks ago we asked some questions about what a further slowdown in Chinese growth might mean, and at what point it becomes a 'crisis'. Now Kate, while arguing that a crisis might not erupt in quite the way — or at quite the speed — that some commentators seem to be expecting, presents some recent expert opinion on the matter.
BARC, priced to go: As Paul notes, you've got to admire the audacity of Credit Suisse, Deutsche Bank, BofA Merrill Lynch and Citi: they've agreed to underwrite the £5.8bn Barclays rights issue, pitched at 185p on a 1-for-4 basis. And all for just just under £100m.
NEWS
Barclays has revealed a £12.8bn hole in its balance sheet as it announced a £5.8bn rights issue, buttressed by a plan to shrink its balance sheet and issue £2bn of contingent convertible debt. The rights issue is the biggest since 2009, and the third biggest in British history. (Financial Times)
China's central bank has injected money into the financial system for the first time in nearly half a year, seeking to stave off a repeat of the cash crunch that blighted the economy in June. The People's Bank of China pumped Rmb17bn ($2.8bn) into the money market via seven-day reverse repurchase agreements on Tuesday, the first time it has conducted that kind of liquidity injection since February 7. (Financial Times)
Euro-area economic confidence jumps to highest in 15 months: "An index of executive and consumer sentiment rose to 92.5 from 91.3 in June, the European Commission in Brussels said today. That is the highest reading since April 2012 and matched the median estimate in a Bloomberg News survey of 31 economists." (Bloomberg)
Japan's industrial production rate fell the most since the March 2011 earthquake, with a 3.3% decline in output in June from the previous month. Although it far exceeded consensus forecasts for a 1.5% drop, analysts said the June decline was probably temporary and would be offset by a bigger rise in July. The jobless rate was 3.9%, the lowest since 2008, and better than the 4.1% expected, raising hopes for inflationary pressure. (Bloomberg) (Wall Street Journal)
US cities edge towards hiring again: "Monthly jobs data from the Labor Department show local governments, which make up about 65% of the overall government workforce, added workers in seven of the past eight months, the longest such streak in five years. So far this year, 46,000 new jobs have been created on a seasonally adjusted basis. Local-government employment through June stood at 14.08 million, the highest level in more than a year and a half, though still well below a peak of 14.61 million in mid-2008." (Wall Street Journal)
Italian banks' loan books being quietly reviewed: "The Bank of Italy is quietly [errr...] inspecting the finances of some of the country's top lenders, which could push some Italian banks to sell assets or take other major steps, according to a central-bank document reviewed by The Wall Street Journal." (Wall Street Journal)
JPMorgan Chase was expected to announce a settlement of about $400m with the US Federal Energy Regulatory Commission as early as today, after being formally charged with rigging power markets in California and the Midwest. Ferc said yesterday that the bank's traders had engaged in eight "manipulative bidding strategies" that generated "tens of millions of dollars at rates far above market prices" in 2010 and 2011. An announcement could come as early as mid-morning EDT. (Financial Times) (Reuters)
Deutsche's net income fell 49 per cent to €335m in the three months from April to June compared with the same period in the year before, the bank said on Tuesday. Analysts polled by Bloomberg had on average forecast a growth in net profits. Profits were weighed down by another rise in litigation provisions. Germany's largest bank by assets increased the money it holds back for possible fines and settlements by another quarter to €3bn. (Financial Times)
UBS said that it will buy back the fund set up to help deal with its toxic assets at the height of the financial crisis, as the Swiss bank reported a 32 per cent rise in net profits in the second quarter. From 2008, UBS transferred a total of around $38.7bn of toxic securities to a so-called stabilisation fund owned jointly with the Swiss National Bank, as it fought to stave off collapse under the weight of more than $50bn in mortgage-related losses. (Financial Times)
BP revealed second-quarter profits that came in well below market expectations, as the company was hit by lower oil prices, a high tax rate and lower income from Russia. BP said it made an underlying profit of $2.7bn in the second quarter, 25 per cent down on a year ago. Analysts had expected BP to report profit of $3.4bn. (Financial Times)
Appetite for subordinated bank debt grows: Global issuance rose 124% in the first half of 2013 compared with the same period last year. According to Moody's, the issuance rebound has been particularly strong in North America, jumping from $2.1bn in the first half of 2012 to $21.7bn. (Financial Times)
Apple says it will investigate allegations of underage workers, forced overtime and insufficient wages at Pegatron, a key supplier. New York-based group China Labor Watch found at least 86 labor rights violations while investigating three Pegatron factories from March to July, it said in a report issued today. Pegatron also said it would investigate the allegations. (Bloomberg)
Prince Alwaleed warned US shale gas posed a threat to Saudi oil revenues, in an open letter addressed to oil minister Ali Naimi. (Financial Times)
Markets: The FTSE Eurofirst 300 is up 0.2 per cent, held back by weakness in financials, but with sentiment supported by a bounce in Tokyo and a 0.7 per cent rise for the Shanghai Composite, after Beijing reduced credit fears by injecting liquidity into the money markets for the first time in five months. US index futures suggest the S&P 500 will gain 4 points to 1,689. That would leave the Wall Street barometer still stuck in the 20 point channel in which it has twitched for 13 sessions. After rising 18 per cent in 2013, the S&P 500 seems to have balked at 1,700, its pause for reflection replicated across bourses globally writes the FT's Global Markets legatus Jamie Chisholm.
