Daily Money & Banking News Update: 07/29/2016

  1. Why Bad Debts Are the “Missing Link” for Stress Tests: European Bank Chief (CNBC)
  2. Bank of Japan OKs More Stimulus, Keeps Rate Steady (MarketWatch)
  3. Bitcoin Experts Are Having a Spat on Whether It’s a Currency or a Commodity (CNBC)
  4. BOJ Eases Policy by Doubling ETF Buying, Underwhelms Expectations (Reuters)
  5. New York Fed Asks Philippines to Recover Bangladesh Money (Reuters)
  6. Credit Suisse to Create US Banking Business for Billionaires (Reuters)
  7. Last-Minute Bid to Be Made to Rescure Monte dei Paschi (CNBC)
  8. Why Bank of Japan Dipped Into Bag of Small Tricks (Wall Street Journal)
  9. Is Bank of Japan Signaling That It’s Running Out of Ammo? (MarketWatch)
  10. Fed’s Kaplan Says Monetary Policy Has Reached Limits for Bolstering Growth (MarketWatch)
  11. Monte dei Paschi Board Backs Private Sector Rescue Plan (Financial Times)
  12. Stress Tests Find Europe’s Bank Sector Would Survive Fresh Crisis (Financial Times)
  13. Weak GDP Closes the Door on Fed Interest Rate Hike in September (MarketWatch)
  14. Wall Street Banks Making More Risky Loans, Regulators Warn (MarketWatch)
  15. Fed’s Williams Says He’s Not Concerned About a Recession (MarketWatch)
  16. Fed Should Not Overreact to Friday’s Q2 US GDP Data – Kaplan (Reuters)
  17. Fed’s Williams Downplays GDP Weakness, Sees Rate Hikes (Reuters)
  18. Fed’s Williams Sees Up to Two US Rate Hikes This Year (Reuters)
  19. Italian, Irish, Spanish Banks Do Worst in EU Stress Test (Reuters)
  20. Bank of England Prepares to Tackle Brexit Hit (Reuters)
  21. Iran’s Global Banking Problems Deepen with Rise of Trump, Brexit (Reuters)
  22. EU Bank Stress Test Results by Core Equity Capital (Reuters)
  23. ECB Approves Monte dei Paschi’s Plan to Sell Bad Loans – Source (Reuters)
  24. IMF Lambasts How It Handled Greece and the Eurozone Crisis (CNBC)
  25. US Authorities Subpoena Goldman in 1MDB Probe (Reuters)

Daily Money & Banking News Update: 07/28/2016

  1. European Banks Brace for Stress-Test Report Cards (CNBC)
  2. ECB Rates Still Safely Above Detrimental Level – Coeuré (Reuters)
  3. The Atlanta Fed Just Slashed Its GDP Outlook (CNBC)
  4. Can These Banks Face the “Stress”? (CNBC)
  5. Under Government Pressure, Bank of Japan Mulling Specific Steps for Easing: Sources (CNBC)
  6. Shinzo Abe’s Fiscal Stimulus Talk Puts Onus on Bank of Japan to Ease (CNBC)
  7. Helicopter Money Might Weaken Currencies More Than QE as Sky’s the Limit (Reuters)
  8. Insurance Companies Have Joined the Ranks of Shadow Banks (Bloomberg)
  9. ECB Policymaker Seeks to Ease Concerns Over Cash Hoarding (Financial Times)
  10. Fresh Batch of Data Gives BOJ More Reason to Ease (Financial Times)

Daily Money & Banking News Update: 07/27/2016

  1. Deutsche Bank in Settlement Talks with DOJ Over Mortgage Probe (Financial Times)
  2. Could Subprime Auto Loans Lead to Same Economic Catastrophe as Risky Mortgages? (MarketWatch)
  3. Italian Banking System Solid, Has Tools to Tackle Bad Loans – Minister (Reuters)
  4. Negative Interest Rates: Could UK Be Next? (CNBC)
  5. How to Decode Warnings in China’s Bank Stress Tests (Wall Street Journal)
  6. FOMC Monetary Policy Statement (Federal Reserve)
  7. Here’s What Changed in the New Fed Statement (CNBC)
  8. Fed Leaves Rates Unchanged in July Meeting (CNBC)
  9. Fed Appears More Willing to Lift Interest Rates in September (MarketWatch)
  10. How the S&P 500 Performs on Fed Decision Days (MarketWatch)
  11. Fed Keeps Rates Unchanged, Says Risks to Outlook Reduced (Reuters)
  12. US Election Risks Could Push Fed Rate Hikes Further Out (Reuters)
  13. Here’s What the Fed Decision Means for a Possible September Hike (CNBC)
  14. Fed Rate Hike Dithering Signals Still Struggling Economy (CNBC)
  15. The Fed Has Missed Its Moment, Doesn’t Know What to Do, Experts Say (CNBC)
  16. Central Bank Views Lift Stocks Worldwide, Yen Slips (Reuters)
  17. Italy’s Renzi Goes Toe-to-Toe with the EU over Italy’s Troubled Banks (Cato Institute)

Federal Reserve Holds Yet Again

Unsurprisingly, the Federal Open Market Committee (FOMC) decided today once again to hold the target federal funds rate at 1/4 to 1/2 percent. Kansas City Fed President Esther George was the sole dissenting vote in this month’s FOMC statement, preferring that the target federal funds rate be raised to 1/2 to 3/4 percent. Pointing to some of the rosier economic data that has come out recently, the FOMC adopted a slightly more upbeat stance in its statement. According to the FOMC, the labor market has strengthened, labor utilization has increased, and household spending has been growing strongly.

One curious statement added in this month’s statement is that “Near-term risks to the economic outlook have diminished.” This is probably a reflection of a belief that market risks from China, from the Eurozone, or within the United States have largely blown over. This seems overly optimistic. While August will likely be slow with so many people taking vacation, September has a history of being an unruly month and the next two to three months are definitely within the “near-term.” Has the Fed forgotten the roller coaster that was September 2008? China is a powder keg waiting for a spark, the Eurozone is facing another crisis in the Italian banking system, and the United States has seen bouts of “good” economic data followed up the next month by bad economic data. Whether the economy will boom or bust over the next three months is still up in the air.

Given the Presidential election coming up in November, it would be highly unlikely for the Fed to raise the target federal funds rate until after the election. The Fed wants to make the economy look as good as possible before the election, and raising rates risks slowing things down and increasing pessimism among voters. That would play into Donald Trump’s hand, so we would not be surprised if President Obama has told Chairman Yellen to do whatever she can to ensure a rosy outlook in November.

Daily Money & Banking News Update: 07/26/2016

  1. 1MDB: Goldman Sachs Faces Suit Over Ties to Malaysian Fund (CNBC)
  2. Why a “Dollar” Should Only Be a Name for a Unit of Gold (Mises Institute)
  3. For This Summer’s Eurozone Crisis, Head to Italy (CNBC)
  4. Why a Fed Repeat of 2015 Will Not Help the Dollar (Financial Times)
  5. RBS May Charge to Hold Cash Deposits If Bank of England Takes Rates Below Zero (MarketWatch)
  6. The German Yield Curve Is Getting Kinky (Wall Street Journal)
  7. Another Negative Rates Wild Ride (Wall Street Journal)
  8. Global QE Running at Record $180 Billion Per Month, and Rising (Reuters)
  9. MPC Member Martin Weale Shifts Stance to Back Stimulus Call (CNBC)
  10. China’s Politburo Vows to Keep Yuan Steady (MarketWatch)
  11. Why the Fed Won’t Hike Rates Despite Having Its “Ducks” In a Row (MarketWatch)
  12. ECB Bond-Buying Dwarfs Eurozone Sales, Pins Yields Near Lows (Reuters)
  13. Europe’s First Regulated Bitcoin Product Launches in Gibraltar (Reuters)
  14. Fed May Edge Closer to Rate Hike (CNBC)
  15. Five Things to Watch at the Fed Meeting (Wall Street Journal)

Daily Money & Banking News Update: 07/25/2016

  1. EU to Register Digital Currency Users, Record Bitcoin Transactions (Cointelegraph)
  2. The Fed Could Tighten in September, But It Will Be a Tall Order, Experts Say (CNBC)
  3. Federal Reserve with Low Credibility Gets Ready to Talk Policy (CNBC)
  4. Fed Prepares Action Against Goldman Sachs in Leak Case (New York Times)
  5. Fed Ready to Penalize Goldman Sachs, Ban Former Exec (MarketWatch)
  6. Fed Officials Push Back Against Calls to Overhaul Central Bank’s Structure (Wall Street Journal)

Weekend Money & Banking News Update: 07/23-07/24/2016

  1. UK Financial Services Firms Will Retain Rights in EU: Johnson (CNBC)
  2. Impact of Brexit Dominates G20 Meeting in Chengdu (Financial Times)
  3. Europe to Tell G20 UK Economy, Banks Are Resilient Despite Brexit (Reuters)
  4. Why Hillary Clinton Thinks Making the Postal Service a Bank Too Is a Good Idea (CNBC)
  5. Italian Finance Minister Rejects Need for Banks Bail-In (Financial Times)
  6. US Groups Hoard Cash as Uncertainty Grows (Financial Times)
  7. Japan’s Finance Minister Welcomes G20 Support for FX Market Stability (Reuters)
  8. G20 Will Use “All Policy Tools” to Lift Growth as Brexit Weighs (Reuters)
  9. Italy Insists There’s “No Banking Problem” as Stress Tests Loom Large (CNBC)

Daily Money & Banking News Update: 07/22/2016

  1. ECB to Signal Future QE Path to Markets in Fourth Quarter – Nowotny (Reuters)
  2. Eyes on Fed, BOJ, Europe’s Bank Stress Test (Reuters)
  3. Johnson Expects City to Keep Passporting Rights (Financial Times)
  4. What to Expect in the Fed Statement Next Week (MarketWatch)
  5. China Finance Minister: G20 Countries Should Promote Sustainable, Balanced Growth (Reuters)
  6. Commitment to Refrain From Competitive FX Devaluations Has Sustained Confidence: Treasury’s Lew (Reuters)

Daily Money & Banking News Update: 07/21/2016

  1. When It Comes to Banks in Europe, Where There’s Smoke, There’s Fire (MarketWatch)
  2. Renminbi Drops to Sixth in International Payment Ranking (Financial Times)
  3. ECB Keeps Interest Rates on Hold (Financial Times)
  4. ECB’s Draghi Spurs Hopes of Public Money to Rescue Banks (Fox Business)
  5. Reuters Poll: Fed to Hold Rates Until at Least December (Fox Business)
  6. ECB’s Mario Draghi Opens Door to “Public Backstop” for Bad Loans (MarketWatch)
  7. Why Italy’s Banks Could Ignite a Eurozone Crisis (MarketWatch)
  8. ECB Keeps Door Open to Easing After Holding Rates Steady (Reuters)
  9. G20 Does Not Need 2009-Style Coordinated Stimulus – US Treasury Official (Reuters)
  10. China Central Bank Official Says Tax Cuts More Effective Than Rate Cuts (Reuters)
  11. PayPal and Visa Announce Strategic Partnership (CNBC)
  12. Yuan Devaluation Unlikely, China’s Vice Finance Minister Says (CNBC)
  13. ECB: Waiting and Watching (Wall Street Journal)