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Economic, Business, and Banking New
The context: The last and most interesting business economic news and reporting from around the globe
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Treasury Futures 'Bearish,' May Extend Slide: Technical Analysis - Bloomberg

Treasury Futures 'Bearish,' May Extend Slide: Technical Analysis - Bloomberg | Economic, Business, and Banking New | Scoop.it
Treasury Futures 'Bearish,' May Extend Slide: Technical Analysis
Bloomberg
Treasury 10-year futures are “bearish” while they stay below a key resistance level and are poised to extend declines, UBS AG (UBSN) said, citing trading patterns.
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Bank of America to Pay $2.43 Billion to Settle Suit Over Merrill Deal - NYT

Bank of America to Pay $2.43 Billion to Settle Suit Over Merrill Deal - NYT | Economic, Business, and Banking New | Scoop.it

New York TimesBank of America to Pay $2.43 Billion to Settle Suit Over Merrill DealNew York TimesBank of America said that the settlement would hurt its results for the quarter, with it and other legal expenses costing it $1.6 billion.

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Asian Stocks Fall 5th Day as U.S. Manufacturing Contracts

Asian Stocks Fall 5th Day as U.S. Manufacturing Contracts | Economic, Business, and Banking New | Scoop.it

Asian stocks fell a fifth day, with the regional benchmark index headed for the longest losing streak in two months, as economic reports from the U.S. to China and Australia stoked concern global growth is slowing.


Samsung Electronics Co. (005930), South Korea’s largest exporter of consumer electronics that gets 20 percent of its revenue in America, lost 2.4 percent in Seoul. Westpac Banking Corp. (WBC), Australia’s No. 2 lender by market value, slid 1.5 percent in Sydney as the country’s economy grew at a slower-than-estimated rate. Fortescue Metals Group Ltd., Australia’s third-biggest iron-ore producer, plunged 8.5 percent as prices of the steelmaking material fell to a three-year low on slowing growth in China.


The MSCI Asia Pacific Index dropped 1.3 percent to 115.74 as of 7:15 p.m. in Tokyo, heading for the longest losing streak since the period ended July 12. More than four stocks declined for each that advanced on the gauge. Volatility across the region gained before the European Central Bank meets tomorrow.
“The macro backdrop is quite challenging and growth conditions are fragile obviously,” said Nader Naeimi, Sydney- based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “The market is getting nervous about going into the ECB meeting. There’s a lot of speculation on the ECB about what they will do.”


Banks Slip


Australian shares fell after the government reported the nation’s economy grew 0.6 percent last quarter from the previous three months. That missed a 0.7 percent expansion forecast by economists surveyed by Bloomberg and was less than half the 1.3 percent pace in the first quarter.
Westpac fell 1.5 percent to A$23.95. Commonwealth Bank of Australia, the nation’s biggest lender by market value, slid 0.2 percent to A$54.55.
Volatility across the region rose as investors awaited developments out of Europe. Mario Draghi, president of the European Central Bank, said the central bank’s primary mandate compels it to intervene in bond markets to wrest back control of interest rates and ensure the euro’s survival. His comments came before the ECB’s Governing Council is due to decide on his bond- buying proposal tomorrow.

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10 Things You Need To Know Before The Opening Bell (SPY, MTB, HCBK, IBM)

10 Things You Need To Know Before The Opening Bell (SPY, MTB, HCBK, IBM) | Economic, Business, and Banking New | Scoop.it

Good morning. Here's what you need to know. Asian markets were mixed in overnight trading with the Nikkei down 0.57 percent, falling to a two-week low. Europe is selling off, and U.S. futures are flat.

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Bond Markets Set to Rev Up in September

Bond Markets Set to Rev Up in September | Economic, Business, and Banking New | Scoop.it

The summer lull is almost over for euro-zone government bond markets, as sovereign issuers are returning to complete the remaining one-third of their annual issuance duties for what should be a busy September.

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Currencies: Dollar pares loss as traders eye central banks

Currencies: Dollar pares loss as traders eye central banks | Economic, Business, and Banking New | Scoop.it

The U.S. dollar gains, with traders taking a cautious approach ahead of high-profile central-bank speeches at the end of the week.


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GLOBAL MARKETS: European Stocks, Euro Drop; Greece, FOMC in Focus - Wall Street Journal

GLOBAL MARKETS: European Stocks, Euro Drop; Greece, FOMC in Focus - Wall Street Journal | Economic, Business, and Banking New | Scoop.it

GLOBAL MARKETS: European Stocks, Euro Drop; Greece, FOMC in FocusWall Street JournalEuropean stocks slid and the euro pulled back against the dollar Wednesday as investors consolidated recent gains, while upcoming meetings between Greece's prime minister...

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Before the Bell: U.S. stock futures gain, Europe in focus

Before the Bell: U.S. stock futures gain, Europe in focus | Economic, Business, and Banking New | Scoop.it

Wall Street is pointing higher on Monday following up on last week’s rally, as Italian and Spanish borrowing costs fell, curbing worry about Europe’s ability to tackles its debt crisis.

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Futures Overseer Plots Revamp

Futures Overseer Plots Revamp | Economic, Business, and Banking New | Scoop.it

The collapse of Peregrine Financial Group Inc. has prompted new scrutiny of the futures industry's front-line regulator and triggered plans to change its practices. (Futures Overseer Plots Revamp: The collapse of Peregrine Financial Group Inc.

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U.S. Housing Starts Near a Four-Year High

U.S. Housing Starts Near a Four-Year High | Economic, Business, and Banking New | Scoop.it
A jump in single-family home construction in June provided the latest evidence of a slow housing recovery.
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The molecules of mayhem: Testosterone and Taking Risks

The molecules of mayhem: Testosterone and Taking Risks | Economic, Business, and Banking New | Scoop.it

The Hour Between Dog and Wolf: Risk-Taking, Gut Feelings and the Biology of Boom and Bust. 


(The Economist) -- By John Coates. Fourth Estate; 310 pages; £20.

To be published in America in June by Penguin Press; $27.95.

THE financial crisis was caused by many things: greedy bankers, a glut of Chinese savings, shoddy regulation, an obsession with home ownership—take your pick. John Coates, once a trader on Wall Street and now a neuroscientist at Cambridge University, presents yet another culprit: biology, or, more precisely, the physiology of risk-taking. Financial traders, he says, are influenced by what is going on in their bodies as well as in the markets.

Two steroid hormones—testosterone and cortisol—come out in force during the excesses of bull and bear markets.

Testosterone, “the molecule of irrational exuberance”, is released into the body during moments of competition, risk-taking and triumph. In animals this leads to something called the “winner effect”. A male that wins one battle goes into the next one primed with higher levels of testosterone, helping him to win again. Eventually, though, confidence becomes cockiness. The animal starts more fights and experiences higher rates of mortality.

Mr Coates thinks the exuberance that turns a market rally into a bubble may be fuelled by the same chemical. Some of this is based on traders he knew who became ever more convinced of their own invincibility during the dotcom era. But he also offers harder evidence. In one experiment Mr Coates sampled testosterone levels in traders in London and found that higher levels of the hormone in the morning correlated with beefier profits in the afternoon. Such profits came from taking higher risks, not greater skill.

Biology may also be responsible for worsening market sentiment in bad times. The body’s response to prolonged periods of stress is to secrete increasing amounts of cortisol, a hormone that marshals resources to cope with crises. Sure enough, Mr Coates finds that cortisol levels in traders’ bodies fluctuate in line with market volatility, even displaying a striking correlation with the prices of derivatives.

A burst of chemicals can be helpful. Good traders seem to produce a lot of hormones, but only for short periods of time. The trouble comes when cortisol remains in the body for extended periods. Rational analysis becomes harder, allowing emotional responses to gain the upper hand; risk aversion grows as testosterone production is suppressed. “During a severe bear market,” writes Mr Coates, “the banking and investment community may rapidly develop into a clinical population.”

One answer, he thinks, is to change the chemical make-up of trading floors by hiring more older men and, especially, women. Their bodies release far less testosterone. Women have the same levels of cortisol as men, but their stress response is triggered less by competitive failures and more by problems in their personal lives. That may make them more resilient when the markets turn against them.

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S&P 500 Futures Slip After Rally Last Week; Grains, Kiwi Climb

S&P 500 Futures Slip After Rally Last Week; Grains, Kiwi Climb | Economic, Business, and Banking New | Scoop.it

U.S. equity futures fell, trimming the Standard & Poor’s 500 Index’s biggest single-day gain in two weeks, while grains rose on concern a U.S. drought will damage crops and the New Zealand dollar strengthened...


S&P 500 futures expiring in September lost 0.1 percent to 1,350.20 as of 7:41 a.m. in Tokyo. The U.S. stocks benchmark added 0.2 percent last week after a 1.7 percent rally on July 13 reversed four days of losses. Corn futures jumped 3.1 percent, while wheat and soybeans rose at least 1.3 percent. The New Zealand currency increased 0.2 percent to 79.77 U.S. cents. The euro traded near a two-year low of $1.2249. Corn and soybean conditions as of July 8 were the worst for that date since the drought of 1988, according to U.S. government data

U.S. stocks rose last week, reversing losses on the final day, as a rally in JPMorgan Chase & Co. (JPM) and speculation China will boost stimulus measures tempered concern about earnings and the global economy. JPMorgan jumped 6.4 percent for the week as Chief Executive Officer Jamie Dimon said the bank will probably post record earnings for 2012 even after reporting a $4.4 billion trading loss.

Four out of the six S&P 500 companies that reported results last week beat analysts’ earnings estimates while one missed...

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China’s Growth Rate Slowed in the 2nd Quarter, Down Sharply From a Year Ago

China’s Growth Rate Slowed in the 2nd Quarter, Down Sharply From a Year Ago | Economic, Business, and Banking New | Scoop.it

The slowdown added to worries about the ability of the world’s second-largest economy to offset low growth elsewhere...


BEIJING — China’s growth slowed in the second quarter, adding to the worries about the ability of the world’s second-largest economy to offset low growth elsewhere.

The country’s gross domestic product grew at an annual rate of 7.6 percent in the April to June period, down sharply from the 9.5 percent a year earlier, according to government figures released Friday morning. The second-quarter growth rate was half a point below the 8.1 percent for the first three months of this year.

For the first half of the year, the economy grew 7.8 percent.

“Even though the economy continued to decline, I think that compared to other countries it isn’t bad,” Sheng Laiyun of the National Bureau of Statistics told reporters. “The economy remains steady.”

The decline is partly caused by a weak global economy. Europe, which until this year was China’s biggest trading partner, is in recession, while the United States economy remains weak. Even developing countries like India and Brazil have weakened considerably.

But part of the downturn is self-induced — an effort by China to wean itself off decades of inefficient growth caused by heavy investment in sometimes dubious projects.

“The most important context for looking at this data is that the boom years are over,” said Andy Rothman of CLSA Research. “The days of 20 percent growth in autos or luxury goods — that’s mostly over.”

Chinese officials say this reflects China’s maturing economy...

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Wall Street Retreats - New York Times

Wall Street Retreats - New York Times | Economic, Business, and Banking New | Scoop.it

Stocks fell and Spain's borrowing costs rose back above 6 percent on Friday, the last day of the quarter, as initial optimism on Madrid's new debt cutting plans gave way to anxiety over its troubled banks,...

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Morgan Stanley latest U.S. bank to lose traders to merchant firm ...

NEW YORK (Reuters) – Three Morgan Stanley gasoline traders in Europe are set to join Swiss commodity trader Mercuria, a source said on Thursday, the latest Wall Street bank to lose traders to aggressive merchants.

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BoE Keeps Interest Rates, Stimulus Program Unchanged - nytimes

BoE Keeps Interest Rates, Stimulus Program Unchanged - nytimes | Economic, Business, and Banking New | Scoop.it

Globe and MailBank of England Keeps Interest Rates and Stimulus Program UnchangedNew York TimesA meeting of the bank's monetary policy committee kept rates on hold at 0.5 percent and elected not to increase its asset-buying program worth £375...


LONDON — The Bank of England held back Thursday from taking fresh measures to stimulate the stagnant British economy, sticking with record-low interest rates and its current program of asset purchases.

A meeting of the bank’s monetary policy committee kept rates on hold at 0.5 percent and elected not to increase its asset-buying program worth £375 billion or $596 billion. The program, known as quantitative easing, is designed to increase the money supply and stimulate economic activity such as spending and borrowing.

In July the bank announced an additional £50 billion of asset purchases which is still underway, and some analysts expect a further expansion in November.

But for now the bank appeared to conclude that there were sufficient indicators of recovery to refrain from new efforts to stimulate economic growth and end Britain’s double-dip recession.

It also appears to be awaiting clearer indications of the impact of a program designed to ease the flow of credit through the British economy. In July the Bank of England and Britain’s Treasury started the program, called the Funding for Lending Scheme, which aims to increase lending to businesses and households by allowing banks and building societies, or mortgage savings banks, to borrow from the Bank of England for up to four years.

On Thursday the Organization for Economic Cooperation and Development estimated that the British economy would shrink by 0.7 percent in the third quarter of this year but acknowledged that its forecast might not account for the effect of the Olympic Games in London or the likely shift of activity into the third quarter because of a public holiday in June to celebrate the Queen’s diamond jubilee.

Britain would emerge from recession with growth of 0.2 percent in the last quarter of the year, the O.E.C.D. suggested.

Last month the Bank of England lowered its growth forecast, predicting an even slower exit from recession than foreseen just three months earlier. But at the time, its governor, Mervyn A. King, ruled out an imminent cut in interest rates or other quick moves to stimulate the economy.

The bank’s own modeling suggested that growth would be close to zero this year, and its report predicted that output was not likely to rise above its precrisis level until 2014. ...

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Debt crisis: Mario Draghi cancels Jackson Hole appearance

Debt crisis: Mario Draghi cancels Jackson Hole appearance | Economic, Business, and Banking New | Scoop.it

European Central Bank president Mario Draghi will not attend the US Federal Reserve's Jackson Hole gathering of central bankers later this week due to a heavy workload, a spokesman said Tuesday.

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Bond Report: Treasury yields fall to two-week low

Bond Report: Treasury yields fall to two-week low | Economic, Business, and Banking New | Scoop.it

Treasury prices gain as little data and low trading volumes give traders little to go off of ahead of Federal Reserve Chairman Ben Bernanke’s speech later in the week.


By Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) — Treasury prices rose on Monday, pushing yields down for the sixth session in seven, as the lack of major data and low trading volumes gave traders little fodder ahead of Federal Reserve Chairman Ben Bernanke’s speech at a Fed retreat on Friday.

Yields on 10-year notes 10_YEAR -2.25% , which move inversely to prices, fell 4 basis points to 1.65%. They haven’t closed below that level since Aug. 13, according to FactSet. A basis point is one one-hundredth of a percentage point.

Thirty-year yields 30_YEAR -1.71% declined 4 basis points to 2.76%.

Yields on 5-year notes 5_YEAR -4.32% fell 3 basis points to 0.69%.

After a big rise in yields in the last month, 10-year notes held a key technical support level, analysts noted.

“It’s hard to imagine that prices will retreat much between now and Friday when Bernanke weighs in at Jackson Hole,” said Bill O’Donnell, head of Treasury strategy at RBS Securities...

Bond prices fell on Friday, pushing yields up but still leaving a weekly decline in yields that was the best for benchmark 10-year notes since mid-June. Concerns about what European political leaders, the European Central Bank and the Federal Reserve will do in the next month created enough uncertainty to keep U.S. bonds attractive...

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TREASURIES-US debt little changed in thin trade, await Bernanke - Reuters

TREASURIES-US debt little changed in thin trade, await Bernanke


ReutersLONDON Aug 27 (Reuters) - U.S.

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New Investment Products in China Raise Fears of Collapse

New Investment Products in China Raise Fears of Collapse | Economic, Business, and Banking New | Scoop.it

Thousands of "wealth management products," instruments, aimed at wealthy investors, have shown phenomenal growth. But the products are often opaque and based on high-risk underlying assets.

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Consumer Spending Is Becoming A Big Red Flag

Consumer Spending Is Becoming A Big Red Flag | Economic, Business, and Banking New | Scoop.it
Monthly data reported included very poor June real retail sales, off -0.5%.  Consumer prices were flat, meaning -0.3% deflation for the 2nd quarter.  Housing permits declined, although still at the third highest level in 4+ years.
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China's Rate Cuts Fall Flat as Small Firms Bypass Banks

China's Rate Cuts Fall Flat as Small Firms Bypass Banks | Economic, Business, and Banking New | Scoop.it
China's bid to energize a stuttering economy by cutting interest rates twice in a month and making it more attractive for banks to take risks on private sector borrowers is falling flat with the country's most dynamic job generators — smaller firms.
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CFTC chief admits failure in oversight of Peregrine

CFTC chief admits failure in oversight of Peregrine | Economic, Business, and Banking New | Scoop.it

The U.S. futures regulator acknowledged on Tuesday the regulatory system had failed to protect the customers of Peregrine Financial Group, which collapsed last week as its founder admitted to a $100 million fraud spanning two decades....


Reuters
10:59 a.m. CDT, July 17, 2012

The U.S. futures regulator acknowledged on Tuesday the regulatory system had failed to protect the customers of Peregrine Financial Group, which collapsed last week as its founder admitted to a $100 million fraud spanning two decades.

In testimony before the Senate Agriculture Committee, Commodity Futures Trading Commission Chairman Gary Gensler was also expected to outline his agency's plans to contain the fallout from the Peregrine case, including a look at the role of self-regulatory organizations (SRO) that police much of the market.

"Although we do not know the full facts of what happened in this matter, the system failed to protect the customers of Peregrine," Gensler said in prepared testimony. "Just like the local police cannot prevent all bank robberies, however, market regulators cannot prevent all financial fraud.

"Nevertheless, we all must do better."

The stunning downfall of Peregrine, or PFGBest, and its founder, Russell Wasendorf Sr., dealt a new blow to confidence in the futures industry, just months after MF Global Holdings Ltd's bankruptcy, which left customers with a $1.6 billion shortfall and which is still being investigated.

Some of the fiercest criticism has been leveled at the National Futures Association (NFA), the first-line regulator that oversees dozens of smaller brokers, including PFGBest.

"The recent events at Peregrine highlight the necessity of looking at the decades-old system of SROs as first-line regulators and the commission's role in overseeing SROs," Gensler said.

AFTER A CENTURY OF SEG FUNDS, TWO VIOLATIONS

The MF Global and PFGBest scandals have raised questions about the strength of federal commodities regulations designed to segregate and protect customer funds....

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Merkel Gives No Ground on Demands for Oversight in Debt Crisis

Merkel Gives No Ground on Demands for Oversight in Debt Crisis | Economic, Business, and Banking New | Scoop.it

Chancellor Angela Merkel gave no ground on Germany’s demands for more central control over euro member states in return for joint burden-sharing as the region struggles to contain the debt crisis...


The German leader said yesterday she hadn’t softened her stance at last month’s summit in Brussels and that a so-called banking union involving a bloc-wide financial overseer will have to include joint oversight on a “new level.” She chided member states who had sought to slow moves toward greater central control “since the first summit” in the 2 1/2-year-old crisis.


Surrendering Sovereignty


Merkel said leaders hadn’t yet reached an agreement on the terms for bank rescues.
German Bundesbank President Jens Weidmann said euro leaders had caused damage by failing to define more clearly their conclusions at the summit. He told Dutch newspaper Het Financieele Dagblad on July 14 that euro nations “should discuss giving up sovereignty with the same openness as the question of how to resolve the debt problem collectively.”
As governments in Spain and Italy struggle under the burden of higher borrowing costs, Weidmann, Germany’s chief central banker and a European Central Bank Governing Council member, told Boersen-Zeitung that Italy’s higher yields don’t justify a request for bailout assistance. Euro bailout funding should be deployed only as a last resort, he said.

“All of these attempts will have no chance with me or with Germany,” Merkel said in an interview with broadcaster ZDF in Berlin.
Two weeks after a European Union summit aimed at bridging differences over crisis resolution, euro leaders are still squabbling over details of how to lift the bloc out of the turmoil. Merkel hardened Germany’s position that any attempt to share burdens in Europe -- such as jointly issued euro bonds or common banking bodies -- must first be met with greater cooperation and a handover of some sovereignty to Brussels.


The Euro 


The euro fell to its lowest level against the U.S. dollar in more than two years last week, sliding to as low as $1.2163 on July 13. Europe’s most credit-worthy government bonds climbed, with German two-year note yields down to a record minus 0.052 percent, as investors sought havens from the euro crisis...

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INFOGRAPHIC: The LIBOR Scandal Explained

INFOGRAPHIC: The LIBOR Scandal Explained | Economic, Business, and Banking New | Scoop.it

The LIBOR scandal is being called the "Wall Street scandal of all scandals" and the "rotten heart of finance," but the massive fraud can be hard to fathom for anyone who doesn't follow the markets.


The London Interbank Offered Rate (LIBOR) is a benchmark interest rate used broadly all over the world and affects trillions of dollars of loans – mortgage loans, small-business loans, personal loans – worldwide.
This nifty infographic from AccountingDegree.net gives non-finance folk an idea of the scope of the scandal




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