Ukraine Banks – Arena Kiev http://arena-kiev.com/ Thu, 30 Jun 2022 11:53:15 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://arena-kiev.com/wp-content/uploads/2021/05/default.png Ukraine Banks – Arena Kiev http://arena-kiev.com/ 32 32 Live updates: Hopes grow for Ukrainian grain shipments as Russia withdraws from Snake Island https://arena-kiev.com/live-updates-hopes-grow-for-ukrainian-grain-shipments-as-russia-withdraws-from-snake-island/ Thu, 30 Jun 2022 11:49:26 +0000 https://arena-kiev.com/live-updates-hopes-grow-for-ukrainian-grain-shipments-as-russia-withdraws-from-snake-island/ German unemployment rose unexpectedly for the first time in 15 months as Ukrainians fleeing war were added to the social security figures for the first time. Bundesbank statistics released on Thursday showed seasonally adjusted unemployment soared to 5.3% this month, from 5% in May. Economists polled by Reuters expected no change. A year ago, the […]]]>

German unemployment rose unexpectedly for the first time in 15 months as Ukrainians fleeing war were added to the social security figures for the first time.

Bundesbank statistics released on Thursday showed seasonally adjusted unemployment soared to 5.3% this month, from 5% in May. Economists polled by Reuters expected no change. A year ago, the rate was 5.8%. It was the first monthly increase since February last year, when the rate was 6%.

The inclusion of Ukrainian refugees in labor market figures has resulted in “one-off distortion”, said Melanie Debono, senior Europe economist at Pantheon Macroeconomics, which forecasts a recession in Germany in the second half of the year.

“The decline in unemployment has slowed down in Germany in recent months,” she added. “We suspect that hiring turnover will slow further as the economic downturn begins.”

The number of registered unemployed increased by more than 100,000 in June, according to the Federal Employment Agency. Analysts had expected a drop of 6,000.

“The labor market as a whole remains stable,” Detlef Scheele, director general of the Federal Employment Agency, told a monthly press briefing in Hamburg on Thursday.

“The June surge in claims is unlikely to be repeated, but we must assume that the labor force will now be larger by the end of the year,” Debono said in a note.

Around 700,000 refugees have moved to Germany from Ukraine since Russia invaded the country in February.

Unemployment in the eurozone fell to 6.6% last month, from a downwardly revised 6.7% in April according to Eurostat figures. Economists expected it to be unchanged at 6.8%.

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Bse Sensex and Nse Nifty Live News Updates https://arena-kiev.com/bse-sensex-and-nse-nifty-live-news-updates/ Tue, 28 Jun 2022 11:27:22 +0000 https://arena-kiev.com/bse-sensex-and-nse-nifty-live-news-updates/ Indian benchmarks BSE Sensex and NSE Nifty50 settled Tuesday’s volatile session as sentiment on the streets remains subdued on rising crude oil prices and the rupee settled at a record low of 78 .79 against the US dollar. Among stocks, Asian Paints and Titan were among Nifty’s biggest losers, while M&M, ONGC and Coal India […]]]>

Indian benchmarks BSE Sensex and NSE Nifty50 settled Tuesday’s volatile session as sentiment on the streets remains subdued on rising crude oil prices and the rupee settled at a record low of 78 .79 against the US dollar. Among stocks, Asian Paints and Titan were among Nifty’s biggest losers, while M&M, ONGC and Coal India provided some support for the indices.

CLOSING MARKET: HIGHLIGHTS
Stable market close amid volatility and sharp decline in the Rupee against the US Dollar
Rupee closes at all-time high 78.79, records biggest 1-day drop in 2 months
Sensex increases by 16 points to 53,177 and astute by 18 points to 15,850
Nifty Bank slips 169 points to 33,642 as Midcap index gains 78 points to 26,791
IT stocks support market as financials drag, Nifty IT rises nearly 1%
Oil and gas stocks like ONGC and Oil India Surge, followed by rising crude prices
Metals stocks rebound on easing of COVID rules in China, Hindalco gains 4%
M&M continues its momentum, shares close at an all-time high
Titan’s fall continues, stocks down more than 11% in June so far
Bajaj Auto earns 3% lows on promoter not participating in buyout
Fertilizer stocks slide as rupiah depreciates, Chambal fertilizer slides more than 6%
Paint stocks under pressure as crude rises, Asian and Berger paints fall 3% each
Bandhan Bk ends in red but out of dips on Colln concerns due to Assam floods
Strides, Petronet, Hind Copper, JSPL, Nalco, Dr Lal Top Midcap Gainers
IEX, Astral, Berger Paints, RBL Bank, Can Fin Homes are the biggest mid-cap losers
Market extent slightly in favor of advances, advance-decline ratio at 1:1

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History comes full circle as G7 alarm bells ring again on energy | Larry Elliot https://arena-kiev.com/history-comes-full-circle-as-g7-alarm-bells-ring-again-on-energy-larry-elliot/ Sun, 26 Jun 2022 17:50:00 +0000 https://arena-kiev.com/history-comes-full-circle-as-g7-alarm-bells-ring-again-on-energy-larry-elliot/ Iis Germany’s turn to host the annual G7 leaders’ summit this year and, although the war in Ukraine tops the agenda at the Bavarian gathering, the economic damage wrought by the invasion Russian will come right after. No one saw what was coming when the G7 last met in Cornwall a year ago. At the […]]]>

Iis Germany’s turn to host the annual G7 leaders’ summit this year and, although the war in Ukraine tops the agenda at the Bavarian gathering, the economic damage wrought by the invasion Russian will come right after.

No one saw what was coming when the G7 last met in Cornwall a year ago. At the time, we were talking about a global post-pandemic recovery; now the fear is of an impending recession as central banks turn hawkish and Vladimir Putin plays the energy card.

The Kremlin has cut gas supplies through the NordStream pipeline by 60% in the past two weeks and alarm bells are ringing in Berlin as the downside of being so dependent on Russian energy becomes apparent. Olaf Scholz, Germany’s new chancellor, is in the unfortunate position of having to clean up a mess caused by his predecessor, Angela Merkel, a politician whose reputation is unlikely to improve over time.

Last week, the German government triggered the second stage of a gas emergency plan. There is no rationing yet, but such an approach is possible, as is the reopening of coal-fired power stations. One of Germany’s goals for the G7 is “strong alliances for a sustainable planet”, which oddly goes along with German energy companies being told to prepare to burn more coal this winter.

When it comes to the G7, the wheel has come full circle. The first meeting of the group (which then included only six countries) was held in France in 1975 as major Western economies struggled to find a response to the oil shock that had ended the long post-war boom. Today, everyone is once again faced with the prospect of a recession.

The US Federal Reserve raised interest rates by 0.75 points earlier this month and signaled that further such hikes are on the way. Its chairman, Jerome Powell, said recession was a possibility when he testified before Congress last week. It’s a confession. The outlook must be pretty bleak before a central banker uses the R-word, but Powell made it clear that when faced with the choice between recession and embedded inflation, he would choose the former.

The Bank of England is also tightening its policy. Relative to the Fed, the Threadneedle Street Monetary Policy Committee is making small strides, so far raising interest rates in 0.25 percentage point increments. It does so against the backdrop of an economy that, despite continued strength in the labor market, appears to be slowing rapidly. The Bank is trying to engineer a soft landing for the economy in which inflation – currently at 9.1% – falls back towards its government target of 2% without triggering a recession. Good luck with that.

The European Central Bank has yet to join other Western central banks in raising rates, despite signaling higher borrowing costs next month. His cautious approach is not surprising as the stakes for the Eurozone are particularly high. If the Federal Reserve or the Bank of England try to meet the highest inflation in 40 years, the consequence will be unnecessary economic pain. If the ECB is wrong, the future of the single currency will again be in doubt.

Europe is vulnerable to a protracted war in Ukraine. It was growing less steeply than the United States before the invasion, in part because the fiscal program—tax cuts and increased spending—in America was larger. Unemployment is higher and, unlike the United States, the EU is not self-sufficient in energy. Europe is closer to the fighting and has suffered more of a supply shock as a result of the conflict.

This is a reason for the ECB to be cautious. Another is the impact of tougher monetary policy – ​​higher interest rates and a reversal of the money creation program known as quantitative easing – that will have on the zone’s weaker members. euro.

Monetary union is an unfinished project. Member States share the same currency but manage their own fiscal and expenditure policies (subject to certain common rules) and issue their own bonds when they borrow on financial markets. The interest rate – or yield – on Italian bonds is higher than on German bonds because investors view Italy as riskier than Germany.

Since the ECB announced that it would join other central banks in raising interest rates, the gap (or spread) has widened between German bond yields and those of Italy, from Spain, Portugal and Greece. Investors worry about how these countries will cope with higher borrowing costs and slower growth.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Ten years ago, Italian and Spanish bond yields reached levels that challenged the breakup of the euro zone into a hard core based around Germany and a softer outer ring. On this occasion, the head of the ECB at the time, Mario Draghi, pledged to do “whatever it takes” to safeguard the single currency. He did the trick.

Today, Christine Lagarde, Draghi’s successor, faces the same problem of fragmentation. At 8.1%, the eurozone inflation rate is far too high for the ECB’s comfort. The question is how to raise borrowing costs without causing such damage to weaker members of the euro zone that their bond yields soar.

The ECB pledged to offer an anti-fragmentation scheme under which the central bank would ensure that bond yields in heavily indebted countries, such as Italy, did not rise excessively. This, however, is not going to be easy. Scholz will struggle to sell a bond-buying program to a skeptical German public, especially since it could result in losses as interest rates rise. Time is not on Lagarde’s side and if she is wrong, the next unwanted shock to the global economy will be a Eurozone crisis.

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US banks test cyber defenses under Treasury direction https://arena-kiev.com/us-banks-test-cyber-defenses-under-treasury-direction/ Fri, 24 Jun 2022 19:16:00 +0000 https://arena-kiev.com/us-banks-test-cyber-defenses-under-treasury-direction/ As global tensions rise over Ukraine, the fierce competitiveness of the US financial sector is giving way to a partnership based on the belief that a cyberattack against even a group of minor banks – or a third-party service provider – could jeopardize everyone in a highly connected system.Some of the nation’s largest banks are […]]]>

As global tensions rise over Ukraine, the fierce competitiveness of the US financial sector is giving way to a partnership based on the belief that a cyberattack against even a group of minor banks – or a third-party service provider – could jeopardize everyone in a highly connected system.
Some of the nation’s largest banks are now working with the Treasury Department, role-playing and sharing information they would have kept close in the past.
“You’re only as good as your weakest link,” said Ron O’Hanley, chief executive of State Street Corp, one of the largest fund managers and custodian banks in the United States. “Networks are made not only by what you do, but also by the suppliers you rely on, the counterparties you deal with, even the regulators you deal with,” he said in an interview.
As part of a broader move to strengthen defenses, Treasury officials late last month brought together executives from several major banks and practiced how they would contact and work together in a range of cyberattack scenarios. .
This simulation exercise, which has not previously been reported, included JPMorgan Chase & Co, Bank of America Corp and Morgan Stanley. It went through five hypothetical threat levels, ranging from minor assaults to a full-scale attack on several critical banks and payment systems.
“You can invest in defenses, but that aspect of repeated practice and continuous improvement is the key to responding to the next threat,” said JF Legault, global head of cybersecurity at JPMorgan Chase during a telephone interview.
Treasury officials also decided to declassify more information to put it in front of financial executives and to extend security clearance to more employees at major banks.
Russia’s invasion of Ukraine and subsequent sanctions against Moscow have upset a fragile balance of financial security. Governments adept at cyber warfare, such as China and Russia, were once seen as players in the global dollar asset market, which in effect prompted them to ignore financial infrastructure.
“What was different with Russia-Ukraine is that the potential threats were not only obvious, but you had a player that was known to be the best in the world in terms of cyber threats,” State Street’s O’Hanley said. . “We take all cyber threats seriously, but you start to think about it differently when it comes to a nation state and, especially in the context of armed conflict.”
The Treasury was also aware that the threat landscape was changing at the end of last year. As they planned the sanctions to be triggered in the event of an invasion of Ukraine, officials concluded that preparations for cyberattacks needed to be stepped up.
“Once we knew where we were going to land with some of the first sanctions plans by the end of 2021 and how severe they were going to be, we knew we had to update our incident response manuals and work with the sector to increase information. sharing,” Todd Conklin, adviser to Treasury No. 2 official Deputy Secretary Wally Adeyemo, said in an interview.
This is part of a steady expansion of a public-private partnership around responding to cyberattacks.
The Cybersecurity Infrastructure Security Agency, CISA, part of the Department of Homeland Security, was founded in 2018 as the lead agency for cyber protection. Nonetheless, Adeyemo said Treasury Secretary Janet Yellen told him on his first day to make cybersecurity a priority.
Adeyemo was inspired by past financial crises, which clearly showed how the interconnectedness of banks makes them vulnerable.
“Telling them ‘shield’ without providing additional support and information sharing isn’t that helpful,” Conklin said. “It’s about making sure that if something happens, we have a plan in place for a collective response.”
When a point in the financial system is attacked, information about the event should be sent through the network of companies, regulators and intelligence agencies as quickly as possible, officials said. Instead of hoarding information for competitive advantage and stifling any unfortunate development, companies need to think cooperatively, sharing intelligence. “It’s about sharing information as soon as possible to ensure that if there is an attack somewhere, you protect the rest of the system,” Adeyemo said.
The biggest banks have known this for a few years, but go further than in the past.
In 2016, the eight largest players, led by JPMorgan and Bank of America, formed the Analysis and Resilience Center for Systemic Risk (ARC), aimed at increasing collaboration in monitoring and protecting critical systems exposed to the Internet, with emphasis on -warning capabilities. It has since grown to include exchanges and clearinghouses as well as several major energy companies.
The group set up its headquarters just outside of Washington because bank executives wanted ARC to work closely with the government, according to Scott DePasquale, ARC president and CEO. A Treasury official co-chairs the group’s risk committee.
There is also a broader ARC counterpart, the Financial Services Information Sharing and Analysis Center, whose members include a wide range of companies from banks and insurers to fintechs, from more than 70 countries.
Concerns remain, particularly regarding third-party service providers.
In the 2020 SolarWinds attack, according to US officials, compromised software was used by Russian hackers to gain access to nearly 18,000 computer systems at more than 100 companies and nine federal government agencies, including the Treasury, the Homeland Security and the State Department. .
But targets don’t need to be so high profile to cause damage. In 2021, Kaseya, an American company that provides IT management and security software services – with a customer base that includes many small banks – found itself the target of a ransomware attack.
The issue, later blamed on Russia-based group REvil, was resolved within days and without a ransom payment. But it has forced officials to think about what would happen if thousands of small banks across the country were crippled, and to wonder how big an attack had to be before it caused a bigger run on bank deposits. and a broader liquidity crisis in the financial system.
“One of the reasons this community is ahead of the rest is that it is constantly probed by cybercriminals,” said James Andrew Lewis, director of the strategic technologies program at the Center for Strategic and International Studies in Washington.
“The top 20 banks – I’m pretty sure they’re a really tough target,” he added. “If you had to choose the bottom 20 financial institutions and even some of the plumbing service providers, I don’t know if I would be so confident.”
There are also concerns about the government itself. The Treasury and other agencies are not just regulatory supervisors. The Treasury issues US government debt and the Fed is a provider of interbank payments, and their systems are subject to attack.

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Daily Update: June 22, 2022 https://arena-kiev.com/daily-update-june-22-2022/ Thu, 23 Jun 2022 02:44:04 +0000 https://arena-kiev.com/daily-update-june-22-2022/ Start each business day with our analyzes of the most pressing developments affecting markets today, along with a curated selection of our latest and most important news on the global economy. Global banks face divergent results Global banks face a range of risks and opportunities from short-term variables arising from deteriorating macroeconomic and credit conditions […]]]>

Start each business day with our analyzes of the most pressing developments affecting markets today, along with a curated selection of our latest and most important news on the global economy.

Global banks face divergent results

Global banks face a range of risks and opportunities from short-term variables arising from deteriorating macroeconomic and credit conditions and long-term considerations including geopolitical shifts and climate change.

A range of risks complicate the outlook for the global economy and the lenders operating in it. The shock of the Russian-Ukrainian war and the sanctions have pushed up inflation, putting additional pressure on major central banks which are reverting to existing monetary policy with a series of interest rate hikes. With global growth looking likely to slump in the near term, the physical risks of climate change – and banks’ exposure to them – could fuel future tensions.

While banks operating in Russia and Ukraine have suffered consecutive months of heavy losses and high provisions for loan losses, other banks in Europe and around the world have had limited direct exposure to its financial consequences because the exposure of foreign banks in monetary terms and as a proportion of total assets according to S&P Global Market Intelligence and S&P Global Ratings. Other banking systems have also been able to withstand geopolitical disruptions. Research by S&P Global Ratings found that in the Gulf Cooperation Council, banks have shown resilience through three decades of political shocks in the region. But elsewhere, the international community’s sanctions on Russia have prompted investors to wonder whether the United States could ever take similar action against Chinese banks, which would pose high-impact risks, according to S&P Global Ratings. And external geopolitical pressures as well as internal political uncertainty continue to strain the Brazilian banking sector.

“Political disruptions tend to trigger investor risk aversion, leading to higher funding costs or possibly capital outflows from banking systems into high-risk markets, even when the events are unrelated to them,” said S&P Global Ratings in a study released today.

Meanwhile, rising interest rates are likely to have diverging effects on different regional banking systems, hurting some while helping others. Australian banks could remain resilient to changing conditions, while Japanese banks could face deteriorating asset quality, widening profitability spreads and heightened credit risk. Latin American banks face difficult operating conditions. According to S&P Global Ratings, tighter monetary policy could benefit banks’ net income in the euro zone, Saudi Arabia, South Africa, the United Kingdom and the United States.

And in the long term, the consideration of climate risks by global banks is likely to expand and be given the same weight as macroeconomic and credit risks.

“In terms of financial stability, the soundness of the financial system may be affected by climate change, when balance sheet assets are concentrated in areas affected by increased damaging weather events (such as storms, floods, fires forest loss and droughts) or chronic physical risk (e.g. sea level rise and changing temperature patterns),” S&P Global Ratings said in a recent economic study. if the transition accelerates, banks’ balance sheets could be affected by ‘stranded assets’, i.e. ‘brown’ assets such as fossil fuels that will no longer be used as the economy transitions to greener production processes could see a sharp decline in value.More generally, climate-related shocks are also likely to affect the dynamics of growth and inflation, and therefore the conduct of monetary policy.

Today is Wednesday, June 22, 2022and here is today’s essential intelligence.

Written by Molly Mintz.

Economy


Economic Research: Emerging Markets: Where’s the Sector Slack?

Emerging markets are facing a tough time as they weather tighter monetary policy in the US, the fallout from the Russia-Ukraine conflict and the impact of COVID-19 related lockdowns in China. These dynamics threaten to set back economic recovery from the downturn of the pandemic, which in most emerging countries is far from over as these new challenges emerge.

—Read the report of S&P Global Ratings

Access more information on the global economy >

Capital markets


Germany’s big banks expect higher profits in 2022 thanks to ECB interest rate hike

Some of Germany’s biggest banks expect interest rate hikes planned by the ECB this year to boost revenues and mitigate the negative effects of the war in Ukraine and the global economic slowdown. The ECB said it would end its long-standing negative rate policy in July and should gradually raise its key deposit rate to zero by the end of 2022. The deposit rate moved into negative territory in June 2014 and has been at -0.5% since September 2019.

—Read the article by S&P Global Market Intelligence

Access more information on capital markets >

International trade


Food for thought: market must take into account all the costs of the disruption of oil flows in Russia

The Western boycott of Russian barrels will be the ultimate test of the oil market. While it has an impressive track record of adapting to unthinkable shifts in business models, from self-imposed embargoes on US exports to sanctions on Iranian and Venezuelan crude, the stakes and costs have never been higher. . The marketplace is already doing what it does best to bring together new buyers and sellers and strengthen existing relationships, but on a scale rarely seen before.

—Read the article by S&P Global Commodities Outlook

Access more information on global trade >

ESG


Japan’s $148 billion transition green bond plan will be a tough sell to investors

Japan will likely offer higher yields and greater disclosure of the use of funds to attract investors to its planned “green transition” sovereign bonds as it accelerates carbon neutrality efforts. Investors will need higher yields to compensate for the low secondary liquidity of transition bonds due to low issuance. Global transition green bond issuance totaled $4.4 billion in 2021, up 33% year-on-year, although it represented less than 1% of the $522.7 billion green bonds issued the same year, according to Climate Bonds Initiative.

—Read the article by S&P Global Market Intelligence

Access more information on ESG >

Energy and raw materials


China’s manufacturing recovery pace remains weak, hurting steel demand

China’s manufacturing index for steel consumption produced by S&P Global Commodity Insights stood at 110 points in May, up 9 points from April, but still down 5 points from the same period of 2021. Despite further improvement seen in China’s manufacturing activity in June as it contained a pandemic resurgence, the strength of the recovery has remained slow, leading to the recent sharp drop in prices of steel, industry sources said.

—Read the article by S&P Global Commodities Outlook

Access more information on energy and raw materials >

Technology and media


Listen: Next In Tech | Episode 70: Robots on the Move

While the company has moved away from Robby the Robot being its image of robots, there’s a more helpful nuance. Senior Research Analyst Ian Hughes returns to discuss a Nine Levels of Autonomy Model with host Eric Hanselman and the effects on robotic technology applications. Autonomous vehicles are just the beginning, and many enabling technologies are in their infancy, but digital twins play a key role in shaping the patterns that drive robots and connect them to digital domains and metaverses.

—Listen and subscribe S&P Global Market Intelligence

Access more information on technology and media >

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REGULATORY CAPITAL STANDARDS ARE VIOLATED BY 16 UKRAINIAN BANKS https://arena-kiev.com/regulatory-capital-standards-are-violated-by-16-ukrainian-banks/ Tue, 21 Jun 2022 07:32:55 +0000 https://arena-kiev.com/regulatory-capital-standards-are-violated-by-16-ukrainian-banks/ As of June 1, 2022, BTA Bank violated the regulatory capital ratio (H1 standard, not less than 200 million UAH) with an indicator of 192.418 million UAH and Alpari Bank (192.998 million UAH), monthly statistics released on the website of the National Authority. Bank of Ukraine show (NBU) for the first time since the start […]]]>

As of June 1, 2022, BTA Bank violated the regulatory capital ratio (H1 standard, not less than 200 million UAH) with an indicator of 192.418 million UAH and Alpari Bank (192.998 million UAH), monthly statistics released on the website of the National Authority. Bank of Ukraine show (NBU) for the first time since the start of a full-scale war.
The standard of maximum amount of credit risk per counterparty (N7 standard, no more than 25%) was violated by Industrialbank (39.18%), Oschadbank (25.01%) and Megabank (59.86%).
The risk standard for a total open position in foreign currency (L13-1 standard, no more than 5%) was violated by Oschadbank (164.53%), PrivatBank (90.2%), Alliance banks ( 78.3%) and Portal (fourteen%). Industrialbank (12.7%), Skybank (8.2%), Trust-Capital Bank (5.4%).
According to the NBU, the foreign currency liquidity coverage ratio (LCRів, not less than 100%) was violated by TASkombank (98.33%), Idea Bank (87.4%), Ibox Bank (69.57% ), Poltava-Bank (29.1%) and Megabank (27.97%).
The Net Stable Funding Ratio (NSFR, not less than 100%) was not met by OTP Bank (99.6%). Alliance (97.3%), Globus Bank (95.7%), GDP (95.1%), Megabank (82.3%).
It is reported that Megabank violated the regulatory capital adequacy ratio (N2 ratio, not less than 10%) with an indicator of 4.08%, the maximum credit risk ratio for transactions with persons related to the bank (N9, no more than 25%) with an indicator of 81.85%, the risk ratio of the total open short position in foreign currency (L13-2 standard, no more than 5%) with a value of 54% and the standard for the liquidity coverage ratio for all currencies (LCR вв, not less than 100%) with an indicator of 3.1%.
Note that the standard for calculating the liquidity coverage ratio (N6) by banks is not indicated in this month’s statistics, since it was canceled on March 23.

REGULATORY CAPITAL, STANDARDS, UKRAINIAN BANKS, VIOLATED

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Everyone got the 2022 market calls wrong; Wall Street, the Fed, central banks and almost all https://arena-kiev.com/everyone-got-the-2022-market-calls-wrong-wall-street-the-fed-central-banks-and-almost-all/ Sun, 19 Jun 2022 06:58:27 +0000 https://arena-kiev.com/everyone-got-the-2022-market-calls-wrong-wall-street-the-fed-central-banks-and-almost-all/ Almost all of Wall Street and the Fed botched market calls for 2022 So far, 2022 has been a year where almost everyone on Wall Street got it wrong. Just like the Fed and a cadre of global central banks. Back in December, strategists at the world’s largest investment firms like JPMorgan Chase & Co. […]]]>

Almost all of Wall Street and the Fed botched market calls for 2022

So far, 2022 has been a year where almost everyone on Wall Street got it wrong. Just like the Fed and a cadre of global central banks.

Back in December, strategists at the world’s largest investment firms like JPMorgan Chase & Co. predicted the S&P 500 would gain 5% in 2022.

Economists saw the 10-year US Treasury yield average 2% at the end of the year. And even Goldman Sachs Group Inc. gave credence to claims that Bitcoin was on track to hit $100,000.

Yet six months later, an unprecedented confluence of shocks brought one of the most powerful bull markets to an end and sent government bonds and other safe-haven assets soaring.

The S&P 500 is down 23%, 10-year rates are at 3.23%, and Bitcoin has lost more than half its value.

The market has quickly moved from “buy everything” to “sell everything”, the multi-year “there is no alternative” (TINA) phenomenon in equities is now gone.

Unforeseen events, including the Russian-Ukrainian war, contributed to the highest consumer prices in 40 years.

And as a result, ultra-low interest rates and monetary stimulus — essentially the bedrock of post-pandemic recovery — evaporated as the Fed and its counterparts sought to stifle inflation.

“This is absolutely the end of TINA for the foreseeable future,” said James Athey, chief investment officer at abrdn in London. “With 8% inflation, not much is attractive on a real basis.”

Even Jerome Powell, the president of the central bank, did not see the turbulence linked to inflation.

He expects price gains to decline to levels closer to the Fed’s long-term target of 2% by the end of 2022.

But now, bond markets are showing signs of recession as the Fed’s aggressive rate hikes pose a risk to the economy’s growth.

“At this time last year, the Fed itself was still expecting [rates] be close to zero at this point,” said Deutsche Bank strategist Jim Reid.

In less than six months, that needle is now pointing to 3.5% by the end of 2022.

bear with me

Even with the steep declines, however, market gurus believe equities will rally by the end of the year.

Oppenheimer’s John Stoltzfus still sees the S&P 500 ending 2022 at 5,330 points, requiring a 45% rally over the next six months. A handful of others, including JPMorgan and Credit Suisse Group AG, have targets that require the index to rally at least 30% to be met.

Wall Street strategists, on average, see the S&P 500 gaining 22% from Friday’s level in the latest Bloomberg survey.

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Certainly anyone can guess when Russia’s war in Ukraine will end or if supply chain bottlenecks due to China’s strict Covid policies will ease, increasing pressures on prices in addition to Fed policy tightening.

But for Max Kettner, chief multi-asset strategist at HSBC Global Research, equities have not fully priced in a recession relative to other asset classes. “Overall, this means there is even more weakness for risk assets in store over the summer months.”

The benchmark S&P 500 index fell 51% from high to low between 2000 and 2002, and 58% during the period of the global financial crisis.

Similarly, Morgan Stanley’s Michael Wilson – one of the few bearish voices in December – said the market’s more than 20% decline still did not fully reflect the risks to corporate earnings.

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Nowhere to hide

At first glance, all one can do is hide money under the mattress with gold and US Treasuries – arguably the safest financial assets in the world – which are also sinking. .

Stocks and bonds are on track for their worst quarter ever. Meanwhile, credit markets have also been hit hard.

So far this year, the world’s safest corporate debt pool has lost more than $900 billion, marking its worst first half on record, according to data from the Bloomberg Index.

Measures of corporate credit risk are also rising, with credit default swaps insuring blue-chip European corporate debt at the highest since April 2020.

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However, perhaps no other asset class has seen such wild swings in 2022 as cryptocurrencies.

Despite all the calls for Bitcoin to hit $100,000 earlier this year and claims that this is an inflation hedge, the digital asset market is in a downward spiral.

Bitcoin has lost two-thirds of its value since hitting a high of nearly $70,000 in November.

Arguments that the world’s largest cryptocurrency was akin to gold and an independent store of value have died down.

Meanwhile, the crypto ecosystem of miners, traders and exchanges has come under increasing scrutiny amid layoffs, freezing withdrawals and liquidity issues.

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It is still not easy to achieve anything in this market. There were big rallies and big withdrawals, painting a bleak picture. But HSBC’s Kettner said the trigger for this year was obvious.

“Just as investors were obsessed with the idea of ​​’transient inflation’ last year, the obsession in 2022 so far has been ‘peak inflation,'” he said. Inflation has not proved transitory and has not yet peaked. As such, “the last few days have been brutal”.

–With help from John Cheng, Michael Msika, Hannah Benjamin, Tanzeel Akhtar and Ksenia Galouchko.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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Live updates: Inflation is starting to change customer behavior, Tesco says https://arena-kiev.com/live-updates-inflation-is-starting-to-change-customer-behavior-tesco-says/ Fri, 17 Jun 2022 06:55:30 +0000 https://arena-kiev.com/live-updates-inflation-is-starting-to-change-customer-behavior-tesco-says/ Stocks in Asia followed Wall Street lower after the UK and Switzerland raised interest rates, adding to fears that tighter central bank monetary policies could undermine a global economic recovery. Japan’s benchmark Topix and Australia’s S&P/ASX 200 both lost 2%, while South Korea’s Kospi fell 1.7%. The Chinese CSI 300, however, bucked the trend, rising […]]]>

Stocks in Asia followed Wall Street lower after the UK and Switzerland raised interest rates, adding to fears that tighter central bank monetary policies could undermine a global economic recovery.

Japan’s benchmark Topix and Australia’s S&P/ASX 200 both lost 2%, while South Korea’s Kospi fell 1.7%. The Chinese CSI 300, however, bucked the trend, rising 0.7%.

The falls in Asian markets came after the S&P 500 index fell more than 3%, sending the US stock index down 6% this week, while the technology-focused Nasdaq Composite fell more of 4%.

Despite a historic 0.75 percentage point rise from the US Federal Reserve on Wednesday, stocks were initially buoyed by comments from Fed Chairman Jay Powell that moves of this magnitude would not become currency. current.

But the Swiss central bank surprised markets on Thursday with its first rate hike since the 2007 global financial crisis after inflation in Switzerland hit a 14-year high last month. This was followed by a rate hike from the Bank of England, which warned that UK inflation would climb above 11% this year.

“Global silver is getting more and more expensive, and there’s still a long way to go,” said Robert Carnell, head of Asia-Pacific research at ING. “Equity futures suggest a rebound as we head into the weekend. But that should probably be treated with a pinch of salt.

Stock futures pointed to a 0.5% rise for the S&P 500 when Wall Street opens later today, while the FTSE 100 was expected to open flat.

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Live updates: HSBC fires London currency trader after customer messaging investigation https://arena-kiev.com/live-updates-hsbc-fires-london-currency-trader-after-customer-messaging-investigation/ Wed, 15 Jun 2022 15:12:24 +0000 https://arena-kiev.com/live-updates-hsbc-fires-london-currency-trader-after-customer-messaging-investigation/ Whitbread UK comparable accommodation sales increased 21.% in the three months to June 2 compared to the same period in 2019 © Bloomberg Whitbread sales beat expectations as the UK’s largest budget hotel operator pulled business from the squeezed independent sector, while sales in its home market were particularly buoyant. Comparable accommodation sales in the […]]]>

Whitbread UK comparable accommodation sales increased 21.% in the three months to June 2 compared to the same period in 2019 © Bloomberg

Whitbread sales beat expectations as the UK’s largest budget hotel operator pulled business from the squeezed independent sector, while sales in its home market were particularly buoyant.

Comparable accommodation sales in the UK were up 21.3% in the three months to June 2 compared to the same period in 2019, before the pandemic hit, the Premier Inn owner said. Compared to last year’s confinement period, they have more than tripled.

Shares of Whitbread rose nearly 4% at the start of trading in London on Wednesday, narrowing the decline for the year to 11%.

Premier Inn’s recovery “continues to be ahead of expectations”, chief executive Alison Brittain said on Wednesday, with the hotel chain “significantly” outperforming the market.

Brittain attributed part of the improved performance to the “accelerating contraction of independent supply”.

Total accommodation sales were 27.2% higher than industry rivals, while UK food and drink sales approached pre-coronavirus levels, the statement said.

“This impressive performance in the first quarter, coupled with improved visibility into the second quarter, gives us added confidence to deliver a strong first half and stay ahead of the market for the rest of the year,” Brittain said.

Shore Capital analyst Greg Johnson said Premier Inn had been buoyed by particularly strong demand in London.

A consumer-driven recession looming this year could hamper the improving sales trend, however, he warned.

Also Germany, where Whitbread has expanded, has exceeded expectations in the past two months as the country emerges from lockdown restrictions.

“We are optimistic about the improving outlook for the full year in Germany,” the statement added. “There is no change in our view of the medium to long-term value creation opportunity for Premier Inn in Germany.”

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Madis Müller: Inflation would only accelerate without raising interest rates | Opinion https://arena-kiev.com/madis-muller-inflation-would-only-accelerate-without-raising-interest-rates-opinion/ Sun, 12 Jun 2022 07:08:00 +0000 https://arena-kiev.com/madis-muller-inflation-would-only-accelerate-without-raising-interest-rates-opinion/ The eurozone saw consumer prices rise 8.1% in May, well above the European Central Bank’s long-term target of 2%. High energy prices increasingly translate into higher prices for other products and services. Russia’s aggression in Ukraine has caused a spike in the prices of foodstuffs and other raw materials of which Russia and Ukraine are […]]]>

The eurozone saw consumer prices rise 8.1% in May, well above the European Central Bank’s long-term target of 2%. High energy prices increasingly translate into higher prices for other products and services.

Russia’s aggression in Ukraine has caused a spike in the prices of foodstuffs and other raw materials of which Russia and Ukraine are the main suppliers. The effects of war and sanctions are further exacerbated by China’s coronavirus restrictions. It is increasingly clear that we have reason to speak of more permanent upward pressure on prices, a situation in which the central bank must intervene.

The rapid inflation in the Eurozone, including in Estonia, was not caused to any notable degree by the extremely liberal policies of the ECB for many years, despite opinions to the contrary.

The central bank’s asset purchases or “printing” lasted seven or eight years, while average price growth in the euro zone was limited to 2% before the middle of last year. It would have been even lower if the ECB had not taken this measure to stimulate the economy.

The effect of the ECB’s quantitative easing was limited, however, as much of the extra money did not reach businesses and individuals. The banks have simply been unable to find enough ways to lend the money created by the ECB’s asset purchases.

Loan growth remained rather modest in the euro area. In other words, the market did not see too much money that would have caused prices to rise sharply through major investments or increased spending.

That said, the ECB would be responsible for the potential deepening of price gains if we failed to react to increasingly broad-based inflation. The full effects of central bank decisions on rising prices will not manifest themselves for a few years, all the more reason not to hesitate. This realization is behind the ECB’s decisions this week.

The ECB’s additional asset purchases will be concluded from 1 July. In addition, we have decided in principle to start raising central bank interest rates in July. Financial markets have been anticipating this change for some time, which is why Euribor interest rates, usually referenced in loan agreements, have risen recently. The 6-month Euribor rate which affects most Estonian borrowers and which had been negative since 2015 is again above zero as of this week.

While the ECB’s decision to make mortgages more expensive for individuals in a situation where rapid inflation is making life difficult for everyone may seem paradoxical, inflation would accelerate even more without an interest rate hike, which would clearly be the worst development. It would be very difficult to contain inflation if the credibility of the central bank suffered if we hesitated. This would require an even bigger hike in interest rates and perhaps at the cost of a recession.

Rapid inflation is hitting everyone’s income and savings, while those less fortunate are likely to be hardest hit. They spend a large part of their income on meeting their basic needs and generally do not have real estate or other investments that could hold their value. The European Central Bank aims only its decisions to return to an inflation of approximately 2% in the years to come.

A look back in history suggests that Eurozone interest rates will remain very low in the Eurozone even after several consecutive hikes. Let me remind you that the six-month Euribor rate, to which we have become accustomed to remaining negative, was on the other side of 5% in 2000 and 2008. That is why the Bank of Estonia for years demanded that commercial banks take a conservative approach to home loans, which means that the creditworthiness of the borrower must take into account much higher potential interest rates.

In summary, it is clear that the central bank must play a role in controlling the price progression that we are prepared for. Since the decisions of the European Central Bank are based on the economic situation of the whole euro area, Estonia needs to take further economic policy measures to contain its even faster than average price increase. This means that Estonia must be careful not to further accelerate price growth through excessive spending and loan-based investment.

Those less fortunate who are most affected by soaring energy and food prices must be offered well-targeted assistance. Investments that could contribute to permanently reducing the pressure on prices caused by expensive energy must be chosen wisely.

Going too far in giving people perks and large-scale tax cuts could end up making things worse, including for the less fortunate, if it makes inflation worse.

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