Chillin' out till it needs to be funded
In a remarkable run of fortitude after the debt ceiling bill negotiations seemed to be leading nowhere, The Chicago PMI came out exceptionally stronger than the expected 52-55 ranging up to 61. Even as 4 out of the 7 sub indices were positive, the PMI was mostly driven down by the decrease in inventories from 63 to 52 consistent with the NY fFed and Philadelphia numbers in June. The other one holding Industrial PMI down in the US ? Chicago couties is the Prices paid, again consistent with weak demand shown by others in the month. All in all June seems to have wound down well for the US markets esp as Jobless claims though above 400K, were down from last week at 428,000. Along with the surprise uptick of 8.8% in Pending Home sales yesterday to 88 after a precipitous 11.6% fall last month from 92, and the great performance in retail sales, the GDP front for the US economy seems well in good health ahead of the stoppage of QE2 tonight and the markets have been holding well.
Among bank negotiations too there was good news all around too as the BAC settlement of $8.5 bln is now effectively behind them with all the provisions amounting to a $0.88 cents loss in Q2 and a profit number for Bank of America in H1. Unrelated though, The investment banks also did a good job with the social IPOs as Zynga filed a $2bln offering and Linked In jumped on recommendations by its underwriting banks this week. The expected commodities uptick fizzled out completely as the Greek vote got restructured and US Treasuries coast along to that ominous Aug 2 deadline ( Repayments are due August 4m in the US, in Greece by July 12)
The debit card fee cap under the Durbin amendment also got closer to becoming a law with signs of a lasting Dodd Frank regulation taking shape and the Cap upped by the government to $0.22 cents per transaction from the proposed $0.12 cents per transaction allowing banks to cut down notional losses on that to $ 6-8 bln esp if it could be defined as a fixed fee.
he Capital surcharge has been negotiated down to 2.5% for the institutions on the SIFI and the G-SIFI lists from a planned 7% that would have taken Tier I capital in larger banks to 14% and probably even obviated the need for closure of proprietary desks originally mooted to safeguard banking deposits and lien.