The Banking and Strategy Initiative

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US Economy & Markets ( The Week Ahead: August 04 – August 08, 2014 )

It’s Monday Again! – HSBC pits as European Banks follow on bad karma, Markets don’t like the Economic upswing?

HSBC reported 4% lower revenues as the prized Asia franchises joined in the worldwide business contraction in Banking by 15% in the continent despite the continuing strength in Hongkong and other parts of ASia as India remained slow on key accounts lost(Non performing industry assets ) and Korea where business contraction was a long drawn affair and continues to bleed despite a few seemly options to shore up the risk

Investment Banking revenue and IBIT was down 12%, apparently from some bad currency bets , probably includes impact of trading losses and revenue reductions on the Euro counter trade in swing and it is still paying penalties for mortgage gumption in the UK

The bank is taking it slow as it looks to firm up market share in retail in the UK again, while competitor StanChart has received much worse press and reports the day after.

In US economic data, after a great GDP prognostication for Q2 at 4% , most economic indicators expectedly followed down from peaks in April but the Jobs report sucked the good mojo out of the market on Friday and left the Dow in tatters at the weekend. The 209k jobs reported followed upward revision of all estimates from April and the last May report at 288k jobs, with June data inexplicably falling off and ten year yields stayed south of the South Pole after a mid week rush for Janet Yellen, as bond investors remain entrenched and with the Oil prices falling off on US production strength too, the US dollar trade meant more SWFs returning to buy US bonds as safe haven.

The Case Shiller data could not sustain except for the green shoots in the Midwest as Pending home sales followed on weak data in the last twelve months. Services (ISM Non mfg ) get reported tomorrow followed by the Trade data for the month on Wednesday while Retail sales and Factory Orders buoy up sentiment on Tuesday, the US unlikely looking to cross the 3% ceiling on growth. Consumer credit report (G.19) follows the weekly balance sheet reports from the Fed on Thursday again pointing to recovery in consumption as pre assumed by the mid west manufacturing indices after a long winter

Markets however seem to have already stayed south for longer than expected and equities might well start back up midweek after today’s mini relief rally  from 16500 even as European penalties pile up and markets discount the coming juggernaut of a rate rise and get started with the new phase of growth for US and UK along with revival in Asia led by India and China



This entry was posted on August 4, 2014 by in Uncategorized.


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