The Banking and Strategy Initiative

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US Economy: The counterintuitive Aussie trade and the Spanish meltdown ( A Tuesday morning review)

ISM Data leads May markets 

Election years actually return a fair 2% in each of the summer months according to a latest Bloomberg report as the Go away in May catches up with investors. Meanwhile Chicago and Dallas were down on yesterdays PMI/Manufacturing reports but still good enough and UK PMI was above 50 in early reports. The ISM’s 300 firms had no problem giving US economy a good 1 point extra over last month as the ISM scored 54.8. New Orders were yet ok at 54.5 and yesterday’s Chicago report was likely right in marking up employment to nearly 59, the only rise in the sub indices reported meaning a lot of well grounded hope from the Jobs report to keep the recovery going.

A low 120k repeat from BLS would definitely hurt prospects but is increasingly looking unlikely, the market consensus urging the data  to a 180,000 score to keep everyone happy.  And hey in case you still follow Ron Paul, I am with Paul (Krugman ) too in wanting a little inflation juice to keep things peppy!

Central Bank Announcements and a floundering Europe

The Aussie traded down after an equally surprising 50 bp cut from the Reserve Bank of Australia as most Asian and European markets were closed for Labor Day except for China and the USA. The Aussie of course is being stocked by most investors in Australia below the 1.03 mark where it is trading right now, market looking for chinks as its large customer in China remains tightlipped on Iron ore and other orders Australian exports rely on.

Bank of America, Starbucks, Delta and Groupon

Bank of America shot down 2000 jobs in the wealth banking and Investment Banking and Commercial banking units as low paid retail jobs were looking unlikely to get it to its Project new BAC targets. Project new BAC would continue to target these divisions in 2012 as the bank remains bound to a larger cost cutting plan to regain operational efficiencies in the new regulatory era. Delta in the meantime bought itself a refinery to help along its $12 bln fuel bill. The refinery near Chicago was planned to be shutdown but will instead directly deliver $300 mln in fuel price savings to Delta Airlines every year. No such luck for Groupon as star Director Howard Schulz seemingly snuck away and Groupon looked up some low cost replacement deals for its board. Schulz probably could not be bothered after Groupon hit a few governance roadblocks and the Starbucks chairman and CEO has a much better work ethic and profits at home in Seattle

China for the Aussie and the Spanish inquisition for everyone

China’s PMI got better and Aussie stocks are looking up already even as the Spanish inquisition teeters on the brink, Euro holding high and rising Net Exports not helping Europe as Spain shows up a EUR 180 bln gap this week. The so called recession in Spain however is still a positive 0.3% on last year in the latest quarter even as unemployment has everyone swimming against the current at the same time as Corporate treasuries continue to outperform along with Sales and business outside Europe.

China’s Resourceful Top 5 Banks

Top Chinese Banks managed to swim out Q1 fine with $22 bln in profits between them now including BoCOM in the Top 4 to make it the resourceful 5,. CCB was nearly superlative in a weak under 20% growth in profits among the 5 with  amore than CnY 100 bln in Net Operating Income vying with no. 1 ICBC even as BOCOM brought up the magnificent score on profits at nearly $ 8 bln. BOC did well too even as AgBank stuck to the ordinary as China vies for a consumer consumption led recovery. The CnY 7 tln books at both CCB and ICBC are spit to 5 tln Renminbi of Corporate loans and 2 Tln Renminbi of consumer loans


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